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| Turmoil sends US stocks tumbling | |
| (about 2 hours later) | |
| US stocks have plunged to a three-year low amid continuing financial volatility and despite the bailout of American insurance giant AIG. | |
| The Dow Jones industrial average fell more than 4% to end at 10,609.66. | |
| European indexes had earlier also fallen, with investors unnerved by recent dramatic events, sparked by the demise of Lehman Brothers. | |
| After AIG's collapse, the White House said the US Treasury was working to see if it could stem other losses. | |
| White House spokeswoman Dana Perino defended the $85bn (£48bn) emergency loan for AIG. | |
| "While no-one would have liked to have ended up in this situation, you have a government that is willing to lead," she said. | |
| |
| How big are these companies? | How big are these companies? |
| Ms Perino insisted: "Our economy has the strength to be able to deal with these shocks." | |
| However she said the government was still concerned about the stability of other big financial companies and it would take time to work through what she called these challenging times. | |
| href="/1/shared/spl/hi/pop_ups/08/in_pictures_global_financial_crisis/html/1.stm" onClick="window.open('http://news.bbc.co.uk/1/shared/spl/hi/pop_ups/08/in_pictures_global_financial_crisis/html/1.stm', '1221658602', 'toolbar=0,scrollbars=0,location=0,statusbar=0,menubar=0,resizable=1,width=600,height=530,left=312,top=100'); return false;">The global financial crisis href="/1/shared/spl/hi/pop_ups/08/in_pictures_global_financial_crisis/html/1.stm" onClick="window.open('http://news.bbc.co.uk/1/shared/spl/hi/pop_ups/08/in_pictures_global_financial_crisis/html/1.stm', '1221658602', 'toolbar=0,scrollbars=0,location=0,statusbar=0,menubar=0,resizable=1,width=600,height=530,left=312,top=100'); return false;" >In pictures | |
| President George W Bush has not answered questions on the economic situation and had cancelled a statement he was set to make on Tuesday. | |
| When asked by a reporter in the Oval Office on Wednesday to comment, Mr Bush said he had not heard the question and joked: "I'm old." | |
| It was a difficult day for the two remaining independent US investment banks, Morgan Stanley and Goldman Sachs, which both fell heavily on Wall Street. | |
| Morgan Stanley was down 24% at $21.75 despite better-than-expected quarterly profits. Goldman Sachs fell 13.9% to $114.50. | |
| The tech-heavy Nasdaq index also plummeted - shedding 4.94% to 2,098.85. | |
| I don't think anyone has got any or much confidence in market direction for more than a few days Darren Winder, Cazenove | I don't think anyone has got any or much confidence in market direction for more than a few days Darren Winder, Cazenove |
| John O'Brien, senior vice president at MKM Partners LLC in Cleveland, told Reuters news agency: "It almost feels like people scour the books and say, 'Who is the next likely target?' and that spreads continuous fear." | |
| Analysts said the reaction to the government's AIG bailout was "tepid at best". | |
| Patrick O'Hare at Briefing.com said: "The realisation that it doesn't fix the underlying problem is an ongoing concern that is mitigating the market's enthusiasm for the plan." | |
| Shares in AIG fell a further 45% to $2.05. | |
| Earlier the FTSE 100 closed 2.2% lower while France's Cac 40 shed 2.1% and Germany's Dax shed 1.7%. | |
| It has been a tumultuous week on financial markets, with significant changes in the financial landscape. | |
| Finance shares globally were among the most volatile. | |
| Top UK mortgage lender HBOS had a rollercoaster ride before news in after-hours trade that it was to be taken over by Lloyds TSB. | |
| By close of trade HBOS was 19% lower, while Royal Bank of Scotland shed 10.4%. | |
| Topsy-turvy trade | Topsy-turvy trade |
| Trade is likely to remain rocky amid concern that financial system instability will continue after the dramatic events of the past few days. | Trade is likely to remain rocky amid concern that financial system instability will continue after the dramatic events of the past few days. |
| "I don't think anyone has got any or much confidence in market direction for more than a few days," said Darren Winder, a strategist at Cazenove. | "I don't think anyone has got any or much confidence in market direction for more than a few days," said Darren Winder, a strategist at Cazenove. |
| AIG's bailout followed the collapse of Lehman Brothers, which caused share prices to plummet across the world's financial markets. | |
| Another investment bank, Merrill Lynch, has been sold off to Bank of America. | Another investment bank, Merrill Lynch, has been sold off to Bank of America. |
| Russia's stock exchange suspended trade following steep falls in shares. | Russia's stock exchange suspended trade following steep falls in shares. |
| Asian shares had a mixed session. Stocks in Tokyo, Taipei, and Seoul all rose, although prices in Hong Kong, Shanghai and Australia lost ground. | Asian shares had a mixed session. Stocks in Tokyo, Taipei, and Seoul all rose, although prices in Hong Kong, Shanghai and Australia lost ground. |
| Japan's Nikkei 225 index ended up 1.2% at 11,749.79, having risen by as much as 2.3% earlier in the day. The index had hit a three-year low on Tuesday. | Japan's Nikkei 225 index ended up 1.2% at 11,749.79, having risen by as much as 2.3% earlier in the day. The index had hit a three-year low on Tuesday. |
| Hong Kong's Hang Seng index ended down 3.6% at 17,637.19 points. | Hong Kong's Hang Seng index ended down 3.6% at 17,637.19 points. |
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