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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.
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. London's FTSE index plunged 7% after figures confirmed Britain's economy shrank 0.5% in the last quarter - the first time in 16 years.
The pound fell below $1.60 for the first time in five years on expectations of further UK rate cuts.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 7.3% lower. There were similar steep falls in other major European markets - Paris and Frankfurt were both down 7%.
In Moscow, trading was suspended for one hour after the main share index dropped 7.4% in the first two hours of trading.
FTSE 100 INDEX: 24 October 2008*All Times GMTFTSE 100 INDEX: 24 October 2008*All Times GMT
DAX INDEX: 24 October 2008*All Times GMTDAX INDEX: 24 October 2008*All Times GMT
On the foreign exchanges, the pound has dropped nearly 8% against the dollar this week. On the foreign exchanges, the pound has dropped 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%. 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% next month.
Nick Kounis said most investors expected a cut of half a percentage point, but said the central bank could decide on "even more aggressive action".
Lower interest rates tend to weaken a country's currency, as investors take their money elsewhere in search of higher yields.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.The euro dropped below 1.27 dollars, hitting a two-year low on expectations of euro zone interest rate cuts and slowing economic growth.
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.
Earnings fearsEarnings 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 oil producers' cartel Opec has agreed to cut oil output by 1.5 million barrels per day at its emergency meeting in Vienna, 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.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.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.