World stocks fall after Goldman charged with fraud, China steps to cool home prices

World stocks fall amid Goldman case, China measure

LONDON — European stock markets fell Monday on concerns over potential broader implications for banks of the U.S. fraud case against investment bank Goldman Sachs and the impact on airlines from the Iceland volcano.

In Asia, markets fell after China announced measures to cool housing prices.

London’s FTSE 100 and France’s CAC-40 were both down 0.7 percent, while Germany’s DAX was off 0.48 percent by 12:45 p.m. London time (7:45 a.m. EST). U.S stock futures were down slightly, extending their slide from Friday.

Oil futures extended a decline that began in electronic trade in Asia, falling by over $2 per barrel, while the dollar weakened against the euro, yen and the British pound.

Driving the drop in Europe and the U.S. was concerns about a possible widening of the problems confronting Goldman Sachs & Co. On Sunday, British Prime Minister Gordon Brown called for authorities there to investigate the investment bank, accusing it of “moral bankruptcy.”

Brown’s comments came after the U.S. Securities and Exchange Commission last week claimed Goldman defrauded investors by failing to disclose key information about mortgage investments it sold as the housing market was collapsing in the run-up to the global financial meltdown.

The news led to speculation that it and other large banks could face stepped-up prosecution or civil suits in connection with deals that contributed to the crisis, dragging on the massive profits banks have earned the last year with the help of government support.

Also weighing on markets were worries that the flight cancellations imposed because of the Iceland volcanic ash cloud would pummel the airline industry. The cancellations entered their fifth day and were costing airlines about $200 million per day.

In the U.S. the Dow Jones industrial average futures fell 54 points, or 0.54 percent, to 10,930. Standard & Poor’s 500 index futures fell 6.60, or 0.6 percent, to 1,183.70, while Nasdaq 100 index futures fell 10.00, or 0.5 percent, to 1,999.75.

The drop built on Friday’s 125-point plummet, which came after the SEC announced charges against Goldman.

The stock declines in Europe were moderate in relation to Asian equity markets’ slide — a drop that saw China’s Shanghai market plummet nearly 5 percent. Fueling the slide, in part, was an announcement by the government over the weekend of more moves to level off housing prices, including possible restrictions on lending to buyers who have already have two or more homes. Real estate prices have risen for months despite government measures and promises to curb speculative property investments.

Shanghai’s key index plunged 150 points, or 4.8 percent, to 2,980.30 — its biggest fall in eight months.

“This time, it seems that the government determination to cool home prices is bigger than before,” said Mao Nan, a strategist for Oriental Securities in Shanghai.

Japan’s Nikkei 225 stock average fell 1.7 percent to 10,908.77 and Hong Kong’s Hang Seng index dropped 2.1 percent to 21,405.17. South Korea’s Kospi retreated 1.7 percent.

Financial names came under intense selling pressure in Asia, with Japanese banking shares among the heaviest casualties. Sumitomo Mitsui Financial Group Inc. fell 3.5 percent, and HSBC dropped 3.2 percent in Hong Kong.

Stock markets in Australia Taiwan and Singapore were also sharply lower.

Oil futures continued to slide, with the benchmark crude for May delivery down $2.29 per barrel at $80.95 per barrel in electronic trade on the New York Mercantile Exchange.

In currencies, the dollar was trading at 91.9 yen from 91.93 yen late Friday. The euro fell to $1.3431 from $1.3476.