Global financial markets probably will come under pressure today, with investor confidence shaky after a wave of U.S. and European corporate profit warnings and potentially destabilizing currency fluctuations in Turkey and Latin America.
Analysts said stocks and risky assets such as emerging-market and corporate bonds would continue to suffer while safe-haven flows buttress government debt and the dollar.
Ugly politics in Argentina, an International Monetary Fund impasse with Turkey, a Brazilian currency meltdown and a trade spat between Latin American trading bloc Mercosur's biggest players snowballed into an avalanche of bad news in emerging markets.
"Clearly the equity markets are on a downward spiral," said Kirit Shah, chief market strategist at Sanwa International in London.
Stocks in Europe hit three-month lows, while in the U.S. stocks have given up more than half of the gains made in an April and May rally.
Leaders from the Group of 7 economic powers issued a cautiously upbeat message on the prospects for pulling through the current global downturn at a weekend meeting in Rome.
U.S. Treasury Secretary Paul H. O'Neill said the U.S. economy, stalled since the latter half of 2000, could return to a more robust annual 2% rate of expansion by the end of this year and even 3% going into next year.
Turkey has become embroiled in a dispute with the IMF over the approval of new loans, though Economy Minister Kemal Dervis said over the weekend that a resolution might be reached today.
Turkish stocks fell more than 10% on Friday, and the lira hit a new low.
The loan is crucial for Turkey as part of a $15.7-billion aid package provided by the IMF and the World Bank to help the country out of a devastating February crisis.
Argentina, meanwhile, helped to touch off a regionwide run on Latin American currencies when an intergovernmental spat about provincial spending sparked fears that the government would be unable to implement its economic program.