* Recession fears hound global equities
* Yen ignores threat of G7 intervention
* Oil near 17-month low, gold down more than 3 pct
By Amanda Cooper
LONDON, Oct 27 (Reuters) - Investor fears that further
possible coordinated action to calm markets will not be enough
to fend off a global recession sent shares from London to Tokyo
reeling on Monday, while the yen continued to surge.
The yen held firm even after the Group of Seven nations
singled out as a cause for concern its excessive volatility,
which has helped propel Japanese equities to their lowest in
nearly 30 years.
The latest joint effort by the world's major industrialised
nations to stem the worst financial crisis in 80 years did
little to convince that governments around the world can quench
the turmoil that has ravaged markets, as investors rush to pull
money out of any region or asset class with a hint of risk.
Emerging market equities took another pounding, falling to
their lowest since September 2004 <.MSCIEF>. Emerging shares
have lost more than 40 percent in October alone.
In Western Europe, shares on the FTSEurofirst 300 index
<> dropped nearly 4 percent by 1305 GMT, led by banking
stocks and energy companies, which took a hit from oil prices
tumbling to a 17-month low.
U.S. stock futures <DJZ8> <SPZ8> <NDZ8> were down between
1.3 and 2.2 percent, suggesting a modest decline at the start of
trading on Wall Street, where shares tumbled to 5-1/2 year lows
on Friday, fuelled by worries that the global slowdown could be
worse than originally thought.
"Until the capital market situation is eased and the money
comes out of governments into the banking system we are not
going to see anything different. Recession remains on everyone's
lips and is the top concern," said Howard Wheeldon, strategist
at BGC Partners.
The euro hit a two-year low against the dollar and its
lowest since March 2002 against the yen, while in another sign
of profound risk aversion, European credit spreads hovered just
shy of Friday's record highs.
"There's lots of volatility, not just in the equity market
but in the interest rate and currency markets too," said Neil
Parker, market strategist at Royal Bank of Scotland.
"We're going to get further big swings as the markets watch
for what the authorities are going to do," he added.
The MSCI world index of shares <.MIWD00000PUS>, which on
Monday was down by nearly 3 percent, has lost nearly 50 percent
this year to reach its lowest since 2003 as investors around the
globe have dumped stocks.
ECONOMY FEELS THE PINCH
Meanwhile, two-year euro zone government bond yields
<EU2YT=RR> touched a new three-year low at 2.572 percent as
concern about the economy intensified.
A closely watched survey on Monday showed German business
expectations fell this month to their lowest level since the
country was unified in 1990. []
"The full fallout of the recent wave of the financial
turmoil is finally becoming visible," wrote Carsten Brzeski, of
the ING Financial Markets global economics team in a note.
"The financial crisis has rapidly turned into an economic
crisis and German businesses have lost all confidence."
In Asia, Japan's Nikkei index <> was down 6.4 percent
at its lowest close since 1982 as the stronger yen hit exporters
such as Canon Inc <7751.T> and Toyota Corp <7203.T>.
Japan promised fresh measures on Monday to try to shield the
world's second-biggest economy from the financial crisis while
South Korea slashed interest rates and Australia's central bank
intervened for a second day to support its tumbling currency.
The actions by Asian policymakers come days ahead of a
widely expected U.S. interest rate cut of 50 basis points by the
Federal Reserve on Wednesday and a report on U.S. third-quarter
economic growth on Thursday. []
Analysts said the G7 statement suggested authorities were at
least considering joint intervention to stem the yen's recent
surge although with the dollar riding high against currencies
other than the yen, that remains far from certain.
The yen <JPY=>, which slipped initially after the G7
statement, climbed back towards Friday's 13-year peak against
the dollar, supported by the unravelling of carry trades built
up over the last few years in which investors sold the
low-yielding currency to buy higher-yielding, riskier assets.
This unwinding has hit emerging markets especially hard.
More countries are expected to turn to the International
Monetary Fund after Ukraine on Sunday agreed on a $16.5 billion
loan [] and Hungary also agreed a package.
The dollar fell 1.4 percent from late U.S. trade last week
to 92.99 yen <JPY=>, pulling back after rising to near 94.50 yen
after the G7 warning.
The euro was down 2.6 percent at 115.94 yen <EURJPY=>,
having touched a 6-1/2 year low of 113.61, according to Reuters
data.
Mirroring global recession fears, oil <CLc1> pared some
losses and was last down 1.3 percent at $63.33 a barrel, but was
still close to its lowest level since May 2007, while spot gold
<XAU=> -- ordinarily a perceived safe-haven investment -- shed
about 2 percent, undermined by the strength in the dollar
against the euro and weaker crude oil.
(Additional reporting by Simon Falush and Joanne Frearson in
London and Rafael Nam in Hong Kong, editing by Stephen Nisbet)
