Global market fall led by sharp drops in China, Greece

BEIJING - Chinese stocks plunged Tuesday, snapping a months-long boom, amid a broad decline in global markets. Greece was suffering its biggest one-day loss since 1987 on concerns that a political crisis might jeopardize its finances.

France's CAC-40 fell 1.4 percent to 4,315.20 and Germany's DAX lost 1 percent to 9,915.88. Britain's FTSE 100 shed 1.3 percent to 6,584.06. Wall Street looked set for further declines. Futures for the Dow Jones industrial average and Standard & Poor's 500 both fell 0.4 percent.

Major Chinese oil and bank stocks fell, some by the daily limit of 10 percent allowed by regulators, as the market took a break from a buying frenzy that has pushed up the Shanghai benchmark by 41 percent since June. Investors had been driven by hopes for an economic rebound combined with outright cheerleading by the state press. But prices fell Tuesday after China's clearing house for securities trades raised the minimum rating for corporate bonds it would accept in exchange for short-term credit, prompting concern about the availability of financing for trades.

Hu Guopeng, an analyst at Founder Securities in Beijing, said the plunge in China's stock markets was a "technical correction" linked to the uncertainty about credit availability created by the change in collateral requirements. It "does not mean the end of the market boom," Hu said.

The Shanghai Composite Index dived 5.4 percent to 2,856.27 though it still was up 6.6 percent over the past week following a months-long rally. China's four major state-owned banks all dropped by at least 9 percent and Sinopec Ltd., Asia's biggest refiner by volume, fell 8.2 percent. China Life Insurance Ltd. fell 10 percent. Hong Kong's Hang Seng dropped 2.3 percent to 23,485.83 and Tokyo's Nikkei 225 fell 0.7 percent to 17,813.38.

The Athens stock exchange was also suffering a big plunge on Tuesday, trading as much as 11 percent lower, which would be its biggest one-day drop in almost 30 years. Investors are worried that the country might have to hold early general elections and that a left-wing opposition party that is leading in the polls, would win. The Syriza party wants a cut to what Greece owes in bailout money. Such a move could spook investors away for years, derailing the country's path out of its financial crisis.

Investor sentiment was also hurt by weak economic data. On Monday, a report showed China's November export growth was weaker than forecast and imports unexpectedly contracted. That suggested economic growth might be cooling further after hitting a five-year low in the latest quarter. For Japan, revised figures for the July-September quarter showed its economy shrank 1.9 percent, a bigger drop than previously estimated.

U.S. benchmark crude was up 75 cents to $63.80 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged by $2.79 on Monday to close at $63.05.

The dollar declined to 119.86 yen from Monday's 120.87 yen. The euro rose to $1.2372 from $1.2307.