Fear of U.S. Interest-Rate Increases Sends Chills Through Markets From Latin America to Europe
German and British stocks dropped as fallout from U.S. interest-rate concerns spread from emerging markets to the more mature markets of Europe.</br></br>Taking their cue from sharp declines in U.S. stocks on Monday, London's FTSE 100 Index fell 1.2% to 6249.3, while in Frankfurt, the Xetra DAX Index declined 88.05 points, or 1.7% to 5165.72. Only four components of the blue-chip DAX index managed to end the day higher.</br></br>European markets slumped even though the Continent is unlikely to face the same threat of higher interest rates that U.S. investors now confront. Indeed, last month European central bankers slashed key lending rates, while Federal Reserve policy makers have shifted their bias in favor of raising rates in the U.S.</br></br>"Looking at European equities in isolation, there's little reason to be concerned about valuations or earnings," said Ian Scott, European equity strategist at Lehman Brothers in London. "The threats to Europe come from outside the Continent."</br></br>Meanwhile, Brazilian stocks were pummeled for the second consecutive session that together have trimmed nearly 10% of the market's value. The benchmark Bovespa Index closed down 552.43 to 10602.10, ruffled by interest-rate concerns and yet another market rumor, this time allegations linking President Fernando Cardoso to a recent privatization controversy.