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Shares worldwide continue falling Shares worldwide continue falling
(30 minutes later)
The US Dow Jones share index enjoyed a brief rally on Thursday before falling back to trade down by 2.5%.The US Dow Jones share index enjoyed a brief rally on Thursday before falling back to trade down by 2.5%.
Investors were digesting data showing industrial production saw its biggest drop since 1974 in September, while inflation in the month was unchanged. Investors were digesting data showing industrial production in September had suffered its biggest drop since 1974, while inflation was unchanged.
European shares have been trading lower following hefty falls in Asia that saw Tokyo's Nikkei index fall 11%. Earlier in the day, Asian shares had fallen sharply with the Nikkei in Tokyo falling 11%.
In afternoon trade, London's FTSE 100 was down 5.7%, France's Cac 40 was 6.7% lower and Germany's Dax was down 5.9%. In Europe, London's FTSE 100 closed down 5.7%, France's Cac 40 fell 5.9% and Germany's Dax lost 4.9%.
On Wednesday, the Dow Jones recorded its biggest one-day percentage fall since October 1987, closing almost 8% down.On Wednesday, the Dow Jones recorded its biggest one-day percentage fall since October 1987, closing almost 8% down.
DOW JONES INDUSTRIAL AVERAGE: 16 October 2008*All Times GMTDOW JONES INDUSTRIAL AVERAGE: 16 October 2008*All Times GMT
Other developments include:
  • US industrial production fell 2.8% in September
  • US consumer price inflation was unchanged in September from August
  • The Philadelphia Federal Reserve's report showed manufacturing conditions had weakened in October
  • In Tokyo, the Nikkei 225 index fell more than 1,000 points, closing down 11.4% at 8,458.45
  • Hong Kong's Hang Seng fell 7.6% to 14,785.60 points
  • Australia's main share index fell 6.7% while India's was down 4%
  • Oil prices fell after weekly US fuel reserves figures rose more than expected. US light, sweet crude for November delivery hit a 14-month low of $69.93 a barrel
  • The Bank of England said it would change the way it was prepared to lend to UK banks with effect from Monday
  • Germany lowered its forecast for economic growth next year from 1.2% to 0.2%
Other developments include:
  • US industrial production fell 2.8% in September
  • US consumer price inflation was unchanged in September from August
  • The Philadelphia Federal Reserve's report showed manufacturing conditions had weakened in October
  • In Tokyo, the Nikkei 225 index fell more than 1,000 points, closing down 11.4% at 8,458.45
  • Hong Kong's Hang Seng fell 7.6% to 14,785.60 points
  • Australia's main share index fell 6.7% while India's was down 4%
  • Oil prices fell after weekly US fuel reserves figures rose more than expected. US light, sweet crude for November delivery hit a 14-month low of $69.93 a barrel
  • The Bank of England said it would change the way it was prepared to lend to UK banks with effect from Monday
  • Germany lowered its forecast for economic growth next year from 1.2% to 0.2%
FTSE 100 INDEX: 16 October 2008*All Times GMTFTSE 100 INDEX: 16 October 2008*All Times GMT
The US inflation figures were better than had been expected, despite the low interest rate policy being pursued by the Federal Reserve.The US inflation figures were better than had been expected, despite the low interest rate policy being pursued by the Federal Reserve.
Hurricanes in the Gulf of Mexico and a strike at Boeing were partly blamed for the big fall in industrial production, which hit sentiment.Hurricanes in the Gulf of Mexico and a strike at Boeing were partly blamed for the big fall in industrial production, which hit sentiment.
"It is one for the record books, or just about," said Chris Rupkey at Bank of Tokyo-Mitsubishi UFJ in New York."It is one for the record books, or just about," said Chris Rupkey at Bank of Tokyo-Mitsubishi UFJ in New York.
"It is a sign that the economy is falling away quickly, and it is certainly consistent with the recession that we seem to be in.""It is a sign that the economy is falling away quickly, and it is certainly consistent with the recession that we seem to be in."
Protracted slowdownProtracted slowdown
Shares rose earlier in the week on optimism after more details emerged about the bank rescue packages being proposed by the UK and the European Union.Shares rose earlier in the week on optimism after more details emerged about the bank rescue packages being proposed by the UK and the European Union.
What we're witnessing is the limits of what these banking bail-outs can achieve in the face of what increasingly looks like the onset of a global economic recession Robert Peston, BBC business editor Read Peston's PicksWhy are markets falling again?What we're witnessing is the limits of what these banking bail-outs can achieve in the face of what increasingly looks like the onset of a global economic recession Robert Peston, BBC business editor Read Peston's PicksWhy are markets falling again?
But worries about how a protracted economic slowdown would affect the rest of the economy are now coming to the fore.But worries about how a protracted economic slowdown would affect the rest of the economy are now coming to the fore.
"Sentiment is deteriorating very fast," said Jacky Choi, a fund manager at Value Partners."Sentiment is deteriorating very fast," said Jacky Choi, a fund manager at Value Partners.
"People are losing what little confidence they have on a day-by-day basis.""People are losing what little confidence they have on a day-by-day basis."
InsufficientInsufficient
Sentiment was not helped by suggestions from the Japanese Prime Minister that the $700bn (£406bn) US bank bail-out package was not enough.Sentiment was not helped by suggestions from the Japanese Prime Minister that the $700bn (£406bn) US bank bail-out package was not enough.
"Since it was insufficient, the market is again falling sharply," Taro Aso said."Since it was insufficient, the market is again falling sharply," Taro Aso said.
There were also signs that the cash injections from central banks had not yet restored confidence in the banking sector.There were also signs that the cash injections from central banks had not yet restored confidence in the banking sector.
BBC business editor Robert Peston said that banks were still not lending to each other at anything like a normal rate of interest relative to official rates.BBC business editor Robert Peston said that banks were still not lending to each other at anything like a normal rate of interest relative to official rates.
Gordon Brown says people need to know financial institutions are acting responsiblyGordon Brown says people need to know financial institutions are acting responsibly
This was worrying as it meant banks were unlikely to lend money at better rates to consumers and businesses.This was worrying as it meant banks were unlikely to lend money at better rates to consumers and businesses.
Many groups are trying to find solutions. Eight mutual European banks led by Credit Agricole have struck a deal to resume lending to each other, according to AFP news agency.Many groups are trying to find solutions. Eight mutual European banks led by Credit Agricole have struck a deal to resume lending to each other, according to AFP news agency.
In another attempt to help banks, the Bank of England has changed the ways it is prepared to lend to them.In another attempt to help banks, the Bank of England has changed the ways it is prepared to lend to them.
The idea will be to allow banks to borrow overnight without any stigma as well as offering loans for up to 30 days with assets such as mortgages acceptable as collateral.The idea will be to allow banks to borrow overnight without any stigma as well as offering loans for up to 30 days with assets such as mortgages acceptable as collateral.
How worried are you about a recession? What financial questions would you like to put to the experts? Send us your queries using the form below.How worried are you about a recession? What financial questions would you like to put to the experts? Send us your queries using the form below.
In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below.In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below.
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