Credit and growth fears hit stocks, dollar, oil

LONDON (Reuters) - Fears of a global credit squeeze and jitters about U.S. economic strength swept across financial markets on Monday, shaking up stocks, knocking the dollar to a 15-year low and sending oil down more than $1.25 a barrel.
Wall Street, which took a beating on Friday, looked set to open higher but European and Japanese shares were down and emerging market shares slumped.
MSCI's emerging market share index lost around 1.6 percent.
Heightened concerns for economic growth knocked some commodities. with benchmark Brent crude oil down $1.28 a barrel at $73.47. At one point, Shanghai copper futures also lost 3 percent.
"People must accept that the market is headed towards a period of correction, and that it's going to take some time before we see a pickup," said Lim Chang-gue, a fund manager at Samsung Investment Trust Management in Seoul.
"A credit crunch is spreading fast, and once started, it won't be easy to reverse," he added.
Markets are being shaken by the prospect that the borrowing that drives the financial system will either become prohibitively expensive or dry up completely as a result of risk repricing This began with difficulties and losses in the U.S. subprime or risky mortgage business but has spread to other areas, including the mergers and acquisitions that have been a main driver of stocks markets. Several companies have delayed or withdrawn planned offerings of shares, bonds or loans.
There are also concerns about the stability of the financial sector.
Monday's ructions, for example, followed sharp losses on Wall Street on Friday after ratings agency Standard & Poor's warned that mortgage credit problems could hurt investment bank Bear Stearns' profits.
Bear Stearns, which was one of the first to be hit by the subprime upheaval, said it was weathering the storm but that credit markets were in their worst shape in two decades.
U.S. jobs data was weak and there was weaker growth in the U.S. service sector and there are concerns that a poor housing market will slow the economy's reacceleration.