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European shares spiral downwards European shares spiral downwards
(20 minutes later)
European share markets have all fallen sharply on renewed recession fears, following an earlier sell-off in Asia.European share markets have all fallen sharply on renewed recession fears, following an earlier sell-off in Asia.
In London, the FTSE 100 index plunged more than 5% ahead of economic figures expected to confirm Britain's economy shrank for the first time in 16 years. London's FTSE index plunged more than 6% after figures confirmed Britain's economy shrank 0.5% in the last quarter - the first time in 16 years.
There were similar falls in other major European markets - Paris was down 4.8% and Frankfurt was 5.3% lower. The pound fell below $1.60 for the first time in five years on expectations of further UK rate cuts.
There were similar steep falls in other major European markets - Paris was down 7% and Frankfurt was 6% lower.
On the foreign exchanges, the pound has dropped nearly 8% against the dollar this week.
Investors are pulling out of the pound because, with the UK economy on the brink of a recession, the Bank of England is widely expected to cut its key interest rate from the current 4.5%.
Lower interest rates tend to weaken a country's currency, as investors take their money elsewhere in search of higher yields.
The euro dropped below 1.27 dollars, hitting a two-year low on expectations of euro zone interest rate cuts and slowing economic growth.
There were losses across all three main European markets, with only two shares showing gains in morning trading.There were losses across all three main European markets, with only two shares showing gains in morning trading.
CMC Markets trader Matt Buckland said: "Volatility and uncertainty seem to be the watch words at the moment."CMC Markets trader Matt Buckland said: "Volatility and uncertainty seem to be the watch words at the moment."
"Asian markets have again been under pressure overnight whilst there's also a degree of concern surrounding the corporate forecasts that came out from across the Atlantic," he said."Asian markets have again been under pressure overnight whilst there's also a degree of concern surrounding the corporate forecasts that came out from across the Atlantic," he said.
In the foreign exchange market, the euro dropped below 1.27 dollars, hitting a two-year low on expectations of eurozone interest rate cuts and slowing economic growth. Recession fears
Oil producers' cartel Opec has started an emergency meeting in Vienna to discuss possible production cuts as it tries to prop up falling prices.
The meeting, originally planned for November, was brought forward because of growing concerns about the impact of the financial crisis on the oil market.
Oil prices have fallen to a 16-month low amid fears a global economic recession will cut demand.
Across Asia, share prices tumbled for a third day in a row as investors feared a global recession would badly hit company earnings.Across Asia, share prices tumbled for a third day in a row as investors feared a global recession would badly hit company earnings.
Japan's Nikkei closed at a five-and-a-half year low, down 9.6% after the electronics giant Sony halved its full-year profit forecasts.Japan's Nikkei closed at a five-and-a-half year low, down 9.6% after the electronics giant Sony halved its full-year profit forecasts.
South Korea's market plunged 10.6% as chip maker Samsung announced a 44% fall in its third-quarter profits.South Korea's market plunged 10.6% as chip maker Samsung announced a 44% fall in its third-quarter profits.
Earlier Thursday was another volatile trading day on Wall Street after a slew of weak corporate earnings stoked fears of a United States recession.Earlier Thursday was another volatile trading day on Wall Street after a slew of weak corporate earnings stoked fears of a United States recession.
The main Dow Jones index fell as low as 8,251 points before closing the day up 172 points or 2% at 8,691.The main Dow Jones index fell as low as 8,251 points before closing the day up 172 points or 2% at 8,691.
The technology-heavy Nasdaq in contrast lost 0.73% to close at 1,603.9 points. The technology-heavy Nasdaq, in contrast, lost 0.73% to close at 1,603.9 points.