Global stocks at 5-1/2 year lows, oil drops

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LONDON, Nov 20 (Reuters): World stocks dropped to 5-1/2 year lows and oil hit 22-month troughs as investors reacted to dire Federal Reserve warnings on the economy and fears about the viability of major US auto makers and bank giant Citigroup.
Oil fell below $52 a barrel Thursday, deepening losses over the previous four sessions as battered financial markets reflected ever lower confidence in the world economy and evidence mounted of falling fuel demand.
Federal Reserve officials slashed economic growth forecasts through 2009, with the lower range of the Fed's central tendencies forecasting the U.S. economy could shrink by 0.2 percent.
Asian share markets have tumbled again because of renewed fears of a prolonged global recession. In Sydney, however, some financial experts say the Australian and Japanese economies may well escape the worst of the international financial meltdown. From Sydney, Phil Mercer reports.
It has been another day of carnage on Asian stock markets.
Japan's Nikkei index fell by almost seven percent Thursday, while Hong Kong's Hang Seng dropped by more than four percent.
There were large falls too in South Korea, as share prices slumped in line with other Asian markets following a big drop overnight on Wall Street.
Markets in Australia, India and Taiwan were lower too, adding to a general sense of despondency over a drawn-out global recession.
The mood on the markets was not helped by data showing that Japan's exports to its neighbors in Asia dropped last month for the first time since 2002.
At the annual Australia-Japan Economic Outlook Conference in Sydney, bankers and government officials have been assessing the crisis.
The MSCI world equity index fell 2.3 percent to 197.90, its lowest since May 2003, driven lower in Asia after data showing Japan's exports to Asia fell for the first time in six years.
European shares also approached their lowest since June 2003, with the FTSEurofirst 300 index of leading European shares dropping 3 percent, following losses of 5 percent or more on Wall Street.
Oil fell by more than $1 a barrel to 22-month lows at $52.49, as the slumping global economy hit demand.
The two-year U.S. Treasury yield hit a record low of 1.06 percent on expectations of a 50 basis point U.S. rate cut to 0.50 percent next month.
Euro zone government bond futures rose more than half a point to their highest since March 2006 at 120.36.
The dollar dropped 0.77 percent to 95.20 against the safe-haven yen, but edged up against the euro to $1.2504.