Signs of a deepening global economic slump slammed stocks worldwide yesterday. The news that US economy fell into recession nearly a year ago added to the gloom.

Federal Reserve chairman Ben Bernanke said the central bank is mulling extreme policy measures such as buying more government bonds to revive growth.

An array of reports showing manufacturing activity around the world contracted at the sharpest pace in a decade, Safe-haven government bonds climbed, while oil prices fell to a 3-1/2-year low on the dour outlook for global demand.

The MSCI index of Asia-Pacific stocks outside Japan dropped 3.5 percent, taking this year’s losses to 57 percent. Hong Kong’s Hang Seng index fell 5 percent and was among the hardest hit in the region.

The S&P 500 index tumbled 8.9 percent. The Dow Jones index dropped 7.7 percent.

The peso fell one percent to close at 49.50 to the US dollar. Local stocks retreated 4.65 percent.

The peso closed at a week’s low 54 centavos lower than Friday’s close of 48.96.

Total volume reached $582 million.

A trader at the Philippine Dealing System attributed the peso’s fall to heightened risk aversion.

"US is under recession. That sparked fears to the markets." the trader said.

An analyst said that remittances from overseas Filipinos have been supporting the peso, but inflows have been limited.

"This week, it might go to as low as P49.90," the analyst said.

The local stock market also closed 4.6 percent lower yesterday following heavy losses on Wall Street.

The composite index closed down 91.70 points at 1,879.87,

while the all-shares index fell 3.6 percent to 1,197.87 points.

There were only 17 gainers, 86 losers and 21 unchanged.

Volume totaled 488 million shares worth P1.032 billion ($20.8 million).

Foreign funds posted a net selling of P270.98 million. In the past 11 months, total foreign selling has reached P39.31 billion, according to data from the Philippine Stock Exchange.

Most actively traded Philippine Long Distance Telephone Co., (PLDT) was down P110 to P2,230.

SM Prime Holdings, Inc., was down P0.04 to P6.80.

Energy Development Corp. was down P0.13 to P2.42.

Metropolitan Bank and Trust Co., was down P0.50 to P24.

Ayala Corp.was down P13 to P180.