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Global shares carry on tumbling Global shares carry on tumbling
(40 minutes later)
European shares have been trading lower following dramatic falls in Asia that saw Tokyo's Nikkei index fall 11%.European shares have been trading lower following dramatic falls in Asia that saw Tokyo's Nikkei index fall 11%.
Global falls have largely wiped out the gains earlier in the week, as fears of recession cancelled out any optimism from government bank rescue packages. Markets in Europe fell sharply in morning trade, but then recovered some ground on signs that US shares were set to recoup some of Wednesday's losses.
London's FTSE 100 fell 3.6%, the Cac 40 index in Paris was down 4.3% and the Dax in Frankfurt dropped 2.1%.
On Wednesday, New York's Dow Jones saw its worst one-day percentage fall since October 1987, closing almost 8% down.On Wednesday, New York's Dow Jones saw its worst one-day percentage fall since October 1987, closing almost 8% down.
In early afternoon trade, London's FTSE 100 fell 0.5%, the French Cac 40 was down 1% while Germany's Dax rose 0.4%.
FTSE 100 INDEX: 16 October 2008*All Times GMTFTSE 100 INDEX: 16 October 2008*All Times GMT
Other developments include:
  • 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%
  • Fears of a protracted downturn also hit oil prices, with benchmark US light, sweet crude for November delivery at a 14-month low of $71.64 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:
  • 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%
  • Fears of a protracted downturn also hit oil prices, with benchmark US light, sweet crude for November delivery at a 14-month low of $71.64 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%
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.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
"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.
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.
No quick turnaroundNo quick turnaround
Yutaka Miura, senior strategist at Shinko Securities, said investors had been particularly unnerved by Wednesday's news of a 1.2% fall in the value of US retail sales between August and September.Yutaka Miura, senior strategist at Shinko Securities, said investors had been particularly unnerved by Wednesday's news of a 1.2% fall in the value of US retail sales between August and September.
"It really confirmed a severe slowdown in the US economy," he told the Associated Press news agency."It really confirmed a severe slowdown in the US economy," he told the Associated Press news agency.
Many investors are now convinced that the US economy, if not already in a recession, is moving towards one.Many investors are now convinced that the US economy, if not already in a recession, is moving towards one.
Ben Bernanke, the chairman of the Federal Reserve, warned that the US economy now faced a "significant threat" from the credit crisis.Ben Bernanke, the chairman of the Federal Reserve, warned that the US economy now faced a "significant threat" from the credit crisis.
In a speech in New York, Mr Bernanke said the US had avoided making the mistakes that helped plunge the country into the 1930s Great Depression.In a speech in New York, Mr Bernanke said the US had avoided making the mistakes that helped plunge the country into the 1930s Great Depression.
He pledged that the Fed would continue to fight the credit crisis. But he warned it would take time for the country's economic health to mend.He pledged that the Fed would continue to fight the credit crisis. But he warned it would take time for the country's economic health to mend.
"The turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth," he said."The turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth," he said.
"The last decade has shown that bursting bubbles can be an extraordinarily dangerous and costly phenomenon for the US economy.""The last decade has shown that bursting bubbles can be an extraordinarily dangerous and costly phenomenon for the US economy."
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.
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