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Major tumble for European shares Fear grips global stock markets
(40 minutes later)
Stock markets across Europe have fallen steeply after dramatic share price falls in Asia.Stock markets across Europe have fallen steeply after dramatic share price falls in Asia.
The FTSE 100 share index was down 5.4% at 4,077 points. It opened 9.8% lower at 3887 points, below the 4,000-point level for the first time in five years. The FTSE 100 share index was down 7% at 4,009 points. It opened 9.8% lower at 3887 points, below the 4,000-point level for the first time in five years.
There were similar falls across Europe - Paris was down 6.2% while Germany was down 8.2%. There were similar falls across Europe - Paris was down 7.9% while Germany was down 9%.
The market mayhem has not eased despite interest rate cuts and huge cash injections by central banks this week.The market mayhem has not eased despite interest rate cuts and huge cash injections by central banks this week.
In Russia, regulators suspended stock market trading indefinitely, citing excessive volatility. The market had been shut temporarily on Wednesday.
FTSE 100 INDEX: 10 October 2008*All Times GMTDAX INDEX: 10 October 2008*All Times GMTFTSE 100 INDEX: 10 October 2008*All Times GMTDAX INDEX: 10 October 2008*All Times GMT
"It's a banking problem, it's a credit crisis problem and it's a complete loss of confidence worldwide," said David Buik of BGC Partners in London. In other major developments:
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  • Tokyo's shares plunged 24% during the week, double their weekly fall during the 1987 market crash
  • Oil prices plummeted to a one-year low in European trading, with the price of US crude oil falling below $83 a barrel.
  • The three-month rate at which banks lend dollars to each other - known as Libor - has risen to 4.8%
  • Finance ministers from the G7 are to meet in Washington later and President Bush is to make an address to the American people.
  • Moscow and Jakarta stock markets remain suspended because of excessive volatility
  • Trading in Vienna market was suspended until Friday afternoon.
Despite concerted government action, investors are increasingly fearful the financial crisis will prompt a global recession.Despite concerted government action, investors are increasingly fearful the financial crisis will prompt a global recession.
"It's a banking problem, it's a credit crisis problem and it's a complete loss of confidence worldwide," said David Buik of BGC Partners in London.
The BBC's business editor Robert Peston said markets were worried about Friday's auction of insurance claims on the debts of the collapsed US investment bank, Lehman Brothers.The BBC's business editor Robert Peston said markets were worried about Friday's auction of insurance claims on the debts of the collapsed US investment bank, Lehman Brothers.
The underlying illness remains in the system - as manifested in the record amounts banks were charging each other yesterday for lending to each other Robert PestonBBC Business Editor Robert Peston's blogThe underlying illness remains in the system - as manifested in the record amounts banks were charging each other yesterday for lending to each other Robert PestonBBC Business Editor Robert Peston's blog
This could not come at a worse time for bank shares, said our correspondent.This could not come at a worse time for bank shares, said our correspondent.
'Unstoppable selling''Unstoppable selling'
Heavy falls were seen across Asia's markets as a climate of fear took hold on Friday.Heavy falls were seen across Asia's markets as a climate of fear took hold on Friday.
In India, the Mumbai market plunged 6.5% in early trading. Shortly afterwards, India's central bank said it would make an additional $12.8bn (£7.5bn) available for the money markets. In Japan, the Nikkei index slumped in its biggest one-day fall since the 1987 stock market crash.
In Japan as the Nikkei index slumped in its biggest one-day fall since the 1987 stock market crash, the crisis claimed its first Japanese financial institution, with the insurance company Yamato Life going bankrupt. The crisis also claimed its first Japanese financial institution, with the insurance company Yamato Life going bankrupt.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
"Selling is unstoppable in New York and Tokyo," said Yutaka Miura, senior strategist at Shinko Securities in Tokyo."Selling is unstoppable in New York and Tokyo," said Yutaka Miura, senior strategist at Shinko Securities in Tokyo.
"Investors were gripped by fear.""Investors were gripped by fear."
At the end of trading on Friday, Tokyo shares had plunged 24% during the week - double their weekly fall during the 1987 market crash.
'Pure panic''Pure panic'
Elsewhere in Asia was a similar story.Elsewhere in Asia was a similar story.
In India, the Mumbai market plunged 6.5% in early trading. Shortly afterwards, India's central bank said it would make an additional $12.8bn (£7.5bn) available for the money markets.
Australian shares closed down 8.3%, Hong Kong's benchmark Hang Seng index slumped to a three-year low while in the Philippines, share prices closed down more 8.3%.Australian shares closed down 8.3%, Hong Kong's benchmark Hang Seng index slumped to a three-year low while in the Philippines, share prices closed down more 8.3%.
In Indonesia, plans to re-open the stock market were suspended in order to prevent what the president of the exchange called "deeper panic". Trading was halted for two days earlier this week.In Indonesia, plans to re-open the stock market were suspended in order to prevent what the president of the exchange called "deeper panic". Trading was halted for two days earlier this week.
Tokyo dealers faced their worst day's trading since the 1987 crashTokyo dealers faced their worst day's trading since the 1987 crash
The Dow Jones - the US benchmark index - ended down 7.3% on Thursday - tumbling below 9,000 points for the first time since August 2003.The Dow Jones - the US benchmark index - ended down 7.3% on Thursday - tumbling below 9,000 points for the first time since August 2003.
"We're way beyond fundamentals," said Chris Orndorff, head of equity strategy at Payden & Rygel, in Los Angeles."We're way beyond fundamentals," said Chris Orndorff, head of equity strategy at Payden & Rygel, in Los Angeles.
"This is just pure panic, that's all it is.""This is just pure panic, that's all it is."
Crisis meetingsCrisis meetings
Finance ministers from the G7 leading industrial countries are set to meet in Washington to discuss the crisis.Finance ministers from the G7 leading industrial countries are set to meet in Washington to discuss the crisis.
US President George W Bush is due to make an address to the American people later in the day.US President George W Bush is due to make an address to the American people later in the day.
As well as the G7 meeting, talks will be held at the International Monetary Fund (IMF) in Washington.As well as the G7 meeting, talks will be held at the International Monetary Fund (IMF) in Washington.
The IMF has said it is ready to lend to countries hit by the global credit crunch, using an emergency lending procedure first used in the 1990s Asian crisis. It has about $200bn immediately available to lend but can tap other sources.The IMF has said it is ready to lend to countries hit by the global credit crunch, using an emergency lending procedure first used in the 1990s Asian crisis. It has about $200bn immediately available to lend but can tap other sources.
What kind of effect is the fall in share prices having on your life? Are you worried about your pension or investments? What questions would you like to put to the experts? Send us your questions using the form below.What kind of effect is the fall in share prices having on your life? Are you worried about your pension or investments? What questions would you like to put to the experts? Send us your questions using the form below.
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