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Global shares continue to slide Global shares continue to slide
(about 2 hours later)
European markets have fallen sharply in Monday trade, touching five-year lows, as investors continue to fret about the depth of the global economic slowdown. Global markets have fallen in Monday trade, touching five-year lows, as investors continue to fret about the depth of the global economic slowdown.
The UK's FTSE 100 fell 5.6% to 3,665 at one point, its lowest level since April 2003, before recovering slightly to 3,758, down 3.2% from Friday's close. On Wall Street, the Dow Jones index opened 1% lower.
Its decline came after Japan's Nikkei index earlier ended at a 26-year low. The UK's FTSE 100 fell 5.6% to 3,665 points at one point, its lowest level since April 2003, before recovering to 3,819, down 1.7% from Friday's close.
The pound also continued its recent falls, dropping against the dollar to $1.5341 in early trading. France's Cac index fell 4.3% and Germany's Dax shed 2.7%. In Japan, the Nikkei index closed at a 26-year low.
The euro was also lower, sliding to $1.2377, around levels last seen in April 2006. The pound also continued its recent falls, dropping against the dollar to $1.5341 in early trading before recovering slightly to $1.5435.
The euro was also lower, sliding to $1.2377, around levels last seen in April 2006, before coming back to $1.2454.
FTSE 100 INDEX: 27 October 2008*All Times GMTFTSE 100 INDEX: 27 October 2008*All Times GMT
"There's lots of volatility, not just in the equity market, but in the interest rate and currency markets too," said Neil Parker, market strategist at Royal Bank of Scotland."There's lots of volatility, not just in the equity market, but in the interest rate and currency markets too," said Neil Parker, market strategist at Royal Bank of Scotland.
"We're going to get further big swings as the markets watch for what the authorities are going to do.""We're going to get further big swings as the markets watch for what the authorities are going to do."
The other main European share indexes also fell sharply, with Germany's Dax down 3.7%, and France's Cac losing 5.9%.
There is more pain left. The global turmoil does not appear to be resolving soon Atul Mehra, J M FinancialThere is more pain left. The global turmoil does not appear to be resolving soon Atul Mehra, J M Financial
Asian impact
Japan's Nikkei 225 index ended down 6.4% at its lowest level since 1982.Japan's Nikkei 225 index ended down 6.4% at its lowest level since 1982.
On the currency markets, Japan's yen stayed near its 13-year high against the US dollar, despite threats of G7 intervention.On the currency markets, Japan's yen stayed near its 13-year high against the US dollar, despite threats of G7 intervention.
Asian impact In other market news:
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  • Oil prices fell to 17-month lows. US light crude was down $1.77 at $62.38 a barrel. Brent was $1.75 lower at $60.30.
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  • India's Sensex index dropped 6.1% to its lowest level since November 2005
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  • The Seoul market reversed early losses to close up 0.8% after South Korea's central bank cut its key interest rate from 5% to 4.25% at a rare, unscheduled meeting
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  • In Hong Kong, the Hang Seng closed down 12.7% in its biggest single-day fall since 1991
  • Chinese shares also fell, with the Shanghai Composite Index losing 6.3% to its lowest level since September 2006
  • In the Philippines, the main index fell 12.3%, as the country's second biggest bank Banco de Oro Unibank reported a loss of 1.3bn pesos ($26.8m; £16.8m) because of its exposure to the US investment bank Lehman Brothers
In other market news:
  • Oil prices fall to 17-month lows. US light crude was down $1.77 at $62.38 a barrel. Brent was $1.75 lower at $60.30.
  • India's Sensex index dropped 6.1% to its lowest level since November 2005
  • The Seoul market reversed early losses to close up 0.8% after South Korea's central bank cut its key interest rate from 5% to 4.25% at a rare, unscheduled meeting
  • In Hong Kong, the Hang Seng closed down 12.7% in its biggest single-day fall since 1991
  • Chinese shares also fell, with the Shanghai Composite Index losing 6.3% to its lowest level since September 2006
  • In the Philippines, the main index fell 12.3%, as the country's second biggest bank Banco de Oro Unibank reported a loss of 1.3bn pesos ($26.8m; £16.8m) because of its exposure to the US investment bank Lehman Brothers
"There is more pain left. The global turmoil does not appear to be resolving soon," said Atul Mehra at the brokerage J M Financial in Mumbai."There is more pain left. The global turmoil does not appear to be resolving soon," said Atul Mehra at the brokerage J M Financial in Mumbai.
Yen warningYen warning
Earlier on Monday the Group of Seven (G7) industrialised nations issued a statement warning that the strength of the yen was a threat to economic stability, which was taken as a threat of co-ordinated action to reduce the value of the currency.Earlier on Monday the Group of Seven (G7) industrialised nations issued a statement warning that the strength of the yen was a threat to economic stability, which was taken as a threat of co-ordinated action to reduce the value of the currency.
DOW JONES INDUSTRIAL AVERAGE: 27 October 2008*All Times GMT
While the yen briefly weakened, it soon climbed back towards Friday's 13-year high against the dollar.While the yen briefly weakened, it soon climbed back towards Friday's 13-year high against the dollar.
The yen has been strengthening as a result of the end of the carry trade, in which traders borrowed the Japanese currency and used it to buy currencies with higher interest rates.The yen has been strengthening as a result of the end of the carry trade, in which traders borrowed the Japanese currency and used it to buy currencies with higher interest rates.
HAVE YOUR SAYBrown's solution to the current global problem is likely to lead to net gainsTom, UK Send us your commentsHAVE YOUR SAYBrown's solution to the current global problem is likely to lead to net gainsTom, UK Send us your comments
As the difference between Japanese rates and those elsewhere in the world has fallen, traders have been unwinding the carry trade, which means they have been using other currencies to buy yen, which has boosted the Japanese currency.As the difference between Japanese rates and those elsewhere in the world has fallen, traders have been unwinding the carry trade, which means they have been using other currencies to buy yen, which has boosted the Japanese currency.
In other currency news, the Australian government intervened for a second time to support its currency, which was trading at a 5-year low against the US dollar. One US dollar was worth 0.6122 Australian dollars.In other currency news, the Australian government intervened for a second time to support its currency, which was trading at a 5-year low against the US dollar. One US dollar was worth 0.6122 Australian dollars.
The Australian central bank last intervened more than a year ago and before that had not done so since 2001.The Australian central bank last intervened more than a year ago and before that had not done so since 2001.