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Stock markets plunge across world Stock markets plunge across world
(about 1 hour later)
Global share markets are falling amid investors' widening fears of sustained worldwide economic recession. Global share markets are falling amid investors' widening fears of a sustained worldwide economic recession.
Wall Street tumbled sharply in opening trading, following similar falls in markets across Europe and Asia. Wall Street tumbled sharply in early trading, following similar falls in markets across Europe and Asia.
The Dow Jones Industrial Average fell 5% in the first minutes of trading, while the hi-tech Nasdaq index plunged as much as 6% at one point. The Dow Jones Industrial Average fell nearly 5% during the morning session, while the hi-tech Nasdaq index declined by more than 4%.
On European markets, London was down 6% in afternoon trading, Frankfurt fell 8% and Paris was 6% lower. On European markets, London dropped 7%, Frankfurt plummeted more than 8% and Paris was down more than 6%.
On currency markets, the pound fell to $1.52 at one point, the lowest level in six years, on expectations of further UK rate cuts. Investors have been dumping shares worldwide because of gloomy prospects for the global economy - and are looking at other forms of investment.
Banking shares were particularly hard hit. Santander, the largest bank in the eurozone, saw its shares plummet 11%. DOW JONES INDUSTRIAL AVERAGE: 24 October 2008*All Times GMT
It will get worse before it gets better - the next 12 months will be very difficult Geoffrey Dicks, RBS Robert Peston's blog
Elsewhere, HBOS plunged 18%, Barclays dropped 14%, Societe General lost 14% and Deutsche Bank was down 11%.
CMC Markets trader Matt Buckland said: "Volatility and uncertainty seem to be the watch words at the moment."
FTSE 100 INDEX: 24 October 2008*All Times GMTFTSE 100 INDEX: 24 October 2008*All Times GMT
DAX INDEX: 24 October 2008*All Times GMT Amid wider signs of the global economic slowdown:
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  • Asian shares tumbled, with Tokyo down 9.6%, Seoul plunging 10.6% and Hong Kong falling 8.3%
  • Oil prices have continued to fall, despite Opec's efforts to steady prices by cutting output by 1.5 million barrels a day. London Brent dropped $4.42 to $61.50 a barrel
  • The UK economy shrank for the first time in 16 years between July and September, confirming that Britain is on the brink of recession
  • The pound saw its biggest one-day drop against the dollar since 1992 falling to $1.52, its lowest level in six years
  • The euro dropped to $1.25, its lowest level for two years, on expectations of eurozone interest rate cuts and slowing economic growth
  • In Moscow, share trading was suspended on both main share indexes until 28 October, after they plunged more than 10%.
Amid wider signs of the global economic slowdown:
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  • The UK economy shrank for the first time in 16 years between July and September, confirming that Britain is on the brink of recession
  • Business activity in Europe slumped to a record low in October, according to the eurozone purchasing managers' index - which fell for the fifth consecutive month, to its lowest level since it was started 10 years ago
  • The pound has dropped more than 8% against the dollar this week, as investors expect further UK interest rate cuts. Lower interest rates tend to weaken a country's currency, as investors take their money elsewhere
  • The euro dropped to $1.25, the lowest level for two years, on expectations of eurozone interest rate cuts and slowing economic growth
  • In Moscow, share trading was suspended on both main share indexes until 28 October, after they plunged more than 10%
  • In Romania, the Bucharest stock exchange was temporarily suspended after some shares plunged almost 15%
  • The oil producers' cartel Opec agreed to cut oil output by 1.5 million barrels per day at its emergency meeting in Vienna, to prop up falling prices. Oil prices are at a 17-month low amid fears an economic recession will cut demand
 Investors are now trying to ascertain how deep the global recession will be and the impact on future growth Chris Jarvis Caprock Risk Management class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/">Robert Peston's blog Global money markets have showed renewed signs of stress, despite the billions of dollars that central banks and governments have pumped into the markets in recent weeks.
As UK shares were battered by data that confirmed the economy was shrinking, RBS chief economist Geoffrey Dicks said Britain's recession would last for at least a year, saying: "It will get worse before it gets better - the next 12 months will be very difficult." Investors worldwide are worried about falling share prices and the possibility of companies defaulting on their debts.
Across Asia, share prices tumbled for a third day in a row as investors feared a global recession would badly hit company earnings. They have been selling shares in markets across the globe and switching to less risky forms of investments, such as government securities.
Japan's Nikkei closed at a five-and-a-half year low, down 9.6% while South Korea's market plunged 10.6%. 'Awful cycle'
On Friday, the yield on US Treasury bills fell - a sign that demand for them is high and investors are willing to earn lower returns in exchange for a safe investment.
However, there was one glimmer of hope and a sign that banks may be more willing to lend to each other. Three-month lending rates among banks in the US and Europe dipped slightly.
What's the real impact of the economic slowdown? BBC News is taking the temperature across the UK in a special day of coverage Special report: The downturn
The London Interbank Offered Rate, or Libor, eased to 3.52%, though the fall was very slight - just 0.02%.
The rates have fallen steadily for 10 days, as confidence in the banking sector has been helped somewhat by all the rescue measures announced by governments.
"Investors are now trying to ascertain how deep the global recession will be and the impact on future growth," said Chris Jarvis, at Caprock Risk Management, New Hampshire.
The dollar and yen both rose sharply against most other major currencies, kindling speculation that central banks might be forced to intervene to rein in volatile moves.
"You are seeing the currencies move as they would in any sort of full-fledged panic," said Firas Askari, at BMO Capital Markets in Toronto.
"I think we have to be close to the end of this awful cycle. It's usually darkest at the bottom," he said.