By Blaise Robinson
PARIS (Reuters) - Stock index futures were sharply down on Wednesday as deepening fears that the credit crisis would make more victims and drag the global economy into recession sent equities plunging around the world.
By 5:51 a.m. EDT, S&P 500 futures were down 2.7 percent, Dow Jones futures down 3.2 percent and Nasdaq 100 futures down 3.1 percent.
European shares were taking a beating, with UK's FTSE 100 index <.FTSE> losing 4.4 percent, Germany's DAX index <.GDAXI> dropping 6 percent, and France's CAC 40 <.FCHI> falling 5.2 percent. Europe's banking sector <.SX7P> was down 5.6 percent.
The Nikkei average <.N225> plummeted 9.4 percent on Wednesday, its biggest one-day drop since the 1987 stock market crash.
In further signs the crisis was escalating, Britain unveiled plans to inject up to 50 billion pounds ($87.2 billion) into its biggest retail banks on Wednesday and Hong Kong slashed interest rates.
Britain's finance minister, Alistair Darling, said he wanted to reduce the "fear factor" in the banking system. In an effort to kickstart stalled money markets, the Bank of England will offer at least 200 billion pounds in short-term lending.
"Governments have been taking steps to restore confidence and it should help ease the crisis, but it might take a while as confidence is something that vanishes very quickly but takes a long time to restore," said Marie-Pierre Peillon, head of equity and credit research at Groupama Asset Management, in Paris.
In the banking sector, Mitsubishi UFJ Financial Group <8306.T>, Japan's top bank, said it has no plans to back out of its $9 billion investment in Morgan Stanley
The U.S. Federal Reserve has granted regulatory approval to Mitsubishi UFJ's bid to take one-fifth of the U.S. bank, but that failed to calm jittery investors who pushed Morgan Stanley's shares down 25 percent on Tuesday.
Morgan Stanley shares in Frankfurt
The turmoil that began on Wall Street more than a year ago has effectively shut down global interbank and other loan markets. Stemming from the meltdown in the U.S. housing market and a spike in bad loans, the crisis is the worst financial storm in almost 80 years.
Shares of U.S. carmakers will be under pressure after Japan's Toyota Motor Corp <7203.T> tumbled 12 percent in Tokyo on talk of a profit warning. A company source said the world's biggest automaker may cut its annual profit outlook on sluggish global demand and a firmer yen.
U.S. stocks sank for a fifth straight session on Tuesday, capping the Dow's biggest five-day point loss ever, as worries mounted that the fast-spreading credit crisis would push the economy into a deep recession.
Federal Reserve Chairman Ben Bernanke did little to reassure markets when he cautioned on Tuesday that downside risks to economic growth have worsened, though he did signal a readiness to lower interest rates.
"Rate cuts in the U.S. and Europe will come, it's one of the tools the central banks have, and on that front, the European Central Bank has more room for maneuver," Peillon said.
Investors will keep an eye on monthly pending home sales data, for more insight on the outlook for the stricken housing market.
(Editing by Quentin Bryar)
