Europe and Britain
The August rebound is memory. The London FTSE 100, Paris CAC and Frankfurt DAX continue to crumble, setting new lows for the year. There is plenty of blame to spread around - wobbly insurance stocks, trouble prone telecommunications companies, the threat of war with Iraq to name just a few. The DAX, CAC and FTSE ended another week with hefty losses, thanks to sharp declines in the insurance sector as traders fretted over the impact of possible asbestos claims at insurance companies. Telecoms stocks also slid for a second day running when France Telecom's refinancing plans were given a distinctly frosty reception. And losses on Wall Street added to their woes as earnings warnings weighed on sentiment. On the week, the DAX lost 3.6 percent, the CAC sank 2.8 percent while the FTSE fell by 2.4 percent.

Asia
Asian markets for the most part rose enough at the beginning of the week to offset end of week losses and finish on the positive side. The Hong Kong Hang Seng and Singapore Straits weren't as lucky, however, and finished lower on the week. For the five days just ended, the Japanese indexes followed here rose for the first week since August 30th, with the Nikkei climbing 1.2 percent and the Topix adding 1.6 percent. The Hang Seng sank to its lowest close since September 27, 2001.

Asian stocks have always been captive to Wall Street's gyrations, rising or falling whenever the U.S. market moves. But this year there have been signs of greater independence among many of the region's markets. While they have been hit in line with global trends, most are still well off the lows currently being plumbed by U.S. markets. Asia has been outperforming for some time on a relative basis despite the fact that the global economy is slowing. Unlike the United States, Asia's bubble burst five years ago with the region's financial crisis. Since then, many companies have been paying down their debt, improving average interest coverage ratios.

Japanese capital flows in the week ending September 6th showed Japanese investors were again net buyers of foreign bonds and strong buyers of foreign equities. Foreign investors were again net sellers of Japanese equities, reflecting a week that saw the Nikkei 225 fall to 18-year lows. However, they were heavy buyers of Japanese bonds as yields fell to close at all-time lows.

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