Europe and Britain
Markets in Europe and Britain continue to react to U.S. developments with greater volatility than in the United States. European stocks were also hit by flooding in Central Europe and the collapse of Vivendi's stock, which plunged about 43 percent last week. This is traditionally high vacation season in Europe and the flooding is having an adverse impact on already struggling economies, especially those that rely on tourism at this time of year. Given the high damage estimates, there also could be an impact on government budgets and whether they will meet the demands of the EU Stability Pact that limit fiscal deficits.

Asia
Asian trading volumes were down as the Japanese O-bon holiday period began. This is a time when many Japanese traders take their annual holidays. Of the Asian indexes followed here, only the Nikkei and Topix were down on the week. Japanese exporters, including automakers, electronics makers and semiconductor-related companies, fell as prospects of slower U.S. economic growth combined with a rising yen to discourage investors. Japanese stocks fell on concern that U.S. earnings of companies such as Toyota Motor Corp may be hurt by the dollar's steep drop against the yen over the past month. The strengthening of the yen is painful for exporters and eats into their earnings and volumes because their products cost more.

Investors' attention on Friday was fixed on the collapse of Nasdaq Japan. The U.S. Nasdaq Stock Market and the Osaka Stock Exchange announced they would pull the plug on the two-year old experiment as of October 15. Nasdaq added there would be no disruption to trading as companies listed on Nasdaq Japan would retain their listing on the OSE. The demise of Nasdaq Japan is an embarrassment for its U.S. parent, which had hoped it would become the new home for technology start-ups and would play a key role in Nasdaq's plan to create a global linkage between Tokyo, New York and London for a 24-hour trading network.

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