Global stocks close dismal first half

By Jennifer Ablan

NEW YORK (Reuters) - The worldwide credit crisis that burst onto investors' radar screens nearly a year ago wiped out some $3.3 trillion (1.66 trillion pounds) in wealth from global stock market wealth in the first half of this year, and optimism for a second-half recovery is fading fast.

Benchmark stock indexes around the world just wrapped up their worst first half in six years or even more. For some, most notably the Dow Jones industrial average, which dropped 14.4 percent in the six months through June 30, it was the poorest start to a year in nearly four decades.

Even the superpowers among stock markets in emerging countries, including China and India, have not escaped the sell-off.

Investors have been dumping anything with risk -- stocks, emerging market assets and corporate credits -- on persistent concerns that a global slowdown will be exacerbated by quickening inflation, fuelled by elevated oil and food prices, and rising interest rates. A crumbling outlook for corporate profits has recently added to the gloom.

That has left much of the world's equity markets in or near a bear market for the first time since the dot-com bubble burst at the beginning of the decade. And few are willing to say the worst is over.

"It is too early to call for a sustainable bottom," Mohamed El-Erian, co-chief executive officer of California-based Pacific Investment Management Co, or Pimco, which oversees $812 billion in assets, said in an interview with Reuters. El-Erian has been a key voice in raising a red flag about a credit bubble for the past year

Sentiment is no better outside the United States.

"In this environment, the stress continues to be very high," said Irene Cheung, head of Asia local markets research with ABN AMRO in Singapore. "The crunch we have seen in the past year is probably not going to go away soon."