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Heavy losses sweep world markets Heavy losses sweep world markets
(20 minutes later)
London's FTSE 100 has dived below the 6,000 points level as uncertainty over the impact of losses in the US sub-prime lending market persisted. Shares on Wall Street have mirrored losses elsewhere, as uncertainty over the impact of turmoil in the US sub-prime lending market persisted.
The index of leading UK shares had fallen 3.1% to 5,927.4 by 1435 BST, following heavy falls in Asia. The Dow Jones index of top US shares opened 1.2% lower, while the Nasdaq shed 1.1% in the first hour of trading.
As concern about the state of world credit markets continued, the Dow Jones index of top US shares opened 0.8% lower, while the Nasdaq shed 0.4%. And as concern about the state of world credit markets continued, London's FTSE 100 dived below 6,000 points.
The Federal Reserve said it was pumping an extra $17bn into the banking system. The falls came despite the Federal Reserve pumping an extra $17bn ($8.6bn) into the US banking system.
Central banks have been taking such action to try and restore confidence and avoid a credit squeeze.Central banks have been taking such action to try and restore confidence and avoid a credit squeeze.
In the past week, the Fed has injected $88bn (£44.3bn), while the European Central Bank has put up 211bn euros ($283.2bn; £142.6bn).In the past week, the Fed has injected $88bn (£44.3bn), while the European Central Bank has put up 211bn euros ($283.2bn; £142.6bn).
Unknown scaleUnknown scale
The FTSE had not fallen below 6,000 during a trading session since March this year. It last closed below that level in October 2006. The FTSE 100 had fallen 3.4% to 5,901.9 by 1530 BST, following heavy falls in Asia.
The index of leading UK shares had not fallen below 6,000 during a trading session since March this year. It last closed below that level in October 2006.
Almost £110bn has been wiped off the value of the UK's leading shares since last Wednesday.Almost £110bn has been wiped off the value of the UK's leading shares since last Wednesday.
In the US, the Dow was down 107.6 points to 12,753.9 in early Thursday trading, having closed below 13,000 on Wednesday for the first time since 24 April. The tech-heavy Nasdaq was 0.8% lower. In the US, the Dow was down 158 points to 12,703.4 in early Thursday trading, having closed below 13,000 on Wednesday for the first time since 24 April. The tech-heavy Nasdaq was at 2,431.52.
France's Cac-40 index was 2.6% lower, while Germany's Dax-30 was down 1.7%France's Cac-40 index was 2.6% lower, while Germany's Dax-30 was down 1.7%
Earlier, Japan's Nikkei index lost 2%, with shares down 3.7% in Hong Kong.Earlier, Japan's Nikkei index lost 2%, with shares down 3.7% in Hong Kong.
The problems in the sub-prime mortgage market will linger on for a while Bart IngelsFortis Bank analyst Q&A: World stock market falls What's causing credit crunch? Peston's Picks: where's the risk?The problems in the sub-prime mortgage market will linger on for a while Bart IngelsFortis Bank analyst Q&A: World stock market falls What's causing credit crunch? Peston's Picks: where's the risk?
The recent financial market volatility has been triggered by the US sub-prime mortgage sector, which offers higher-risk loans to people with a poor credit history.The recent financial market volatility has been triggered by the US sub-prime mortgage sector, which offers higher-risk loans to people with a poor credit history.
As US interest rates have risen and the housing bubble has burst, a growing number of sub-prime borrowers have defaulted on their loans.As US interest rates have risen and the housing bubble has burst, a growing number of sub-prime borrowers have defaulted on their loans.
This has led to extensive financial difficulties for a number of investment funds with heavy exposure to the sector - and triggered fears of a wider financial crisis.This has led to extensive financial difficulties for a number of investment funds with heavy exposure to the sector - and triggered fears of a wider financial crisis.
While some estimates say $300bn in loans could be at risk, one of the biggest worries for investors is not knowing the eventual scale of the problem.While some estimates say $300bn in loans could be at risk, one of the biggest worries for investors is not knowing the eventual scale of the problem.
Falls in Asia triggered further losses in EuropeFalls in Asia triggered further losses in Europe
However, such moves, along with comments by US Treasury Secretary Henry Paulson that the economy was strong enough to withstand the turmoil, have done little to appease investors.However, such moves, along with comments by US Treasury Secretary Henry Paulson that the economy was strong enough to withstand the turmoil, have done little to appease investors.
In Japan, the Nikkei index closed down 2% at 16,148.49 and elsewhere in Asia, Singapore lost almost 3.7% and Australia's benchmark S&P/ASX 200 lost 1.7% - having at one point suffered its biggest one-day percentage drop in more than seven years.In Japan, the Nikkei index closed down 2% at 16,148.49 and elsewhere in Asia, Singapore lost almost 3.7% and Australia's benchmark S&P/ASX 200 lost 1.7% - having at one point suffered its biggest one-day percentage drop in more than seven years.
And in Mumbai, India's Sensex index lost 4.3% of its value.And in Mumbai, India's Sensex index lost 4.3% of its value.
Credit problemsCredit problems
Australian home loan firm RAMS saw its shares sink 36% after it said it had failed to refinance 6.17bn Australian dollars ($5bn; £2.5bn) in debt after the credit crunch spurred by the crisis in the US housing market.Australian home loan firm RAMS saw its shares sink 36% after it said it had failed to refinance 6.17bn Australian dollars ($5bn; £2.5bn) in debt after the credit crunch spurred by the crisis in the US housing market.
The problems also came to the fore when Merrill Lynch told its clients to sell any shares they own in the country's largest mortgage lender, Countrywide Financial.The problems also came to the fore when Merrill Lynch told its clients to sell any shares they own in the country's largest mortgage lender, Countrywide Financial.
It warned that Countrywide, whose shares lost another 15% early on Thursday, could face bankruptcy if the availability of credit in the market got any worse - and there were market rumours that the lender had failed to raise some money it needed.It warned that Countrywide, whose shares lost another 15% early on Thursday, could face bankruptcy if the availability of credit in the market got any worse - and there were market rumours that the lender had failed to raise some money it needed.
The company dented confidence further on Thursday when it revealed it had been forced to draw on an $11.5bn line of credit to fund its operations.The company dented confidence further on Thursday when it revealed it had been forced to draw on an $11.5bn line of credit to fund its operations.
"The problems in the sub-prime mortgage market will linger on for a while," said Bart Ingels, an analyst at Fortis Bank, in Brussels."The problems in the sub-prime mortgage market will linger on for a while," said Bart Ingels, an analyst at Fortis Bank, in Brussels.
"Some days it was a little bit better but then negative news came to the fore, and it will go on like that for a while.""Some days it was a little bit better but then negative news came to the fore, and it will go on like that for a while."
Meanwhile, French president Nicolas Sarkozy called on the G7 industrial nations to better monitor financial markets.Meanwhile, French president Nicolas Sarkozy called on the G7 industrial nations to better monitor financial markets.
Countries should ensure that their systems for monitoring potential market problems, he said, adding that, in case of unforeseen events in credit markets, cash should be made available.Countries should ensure that their systems for monitoring potential market problems, he said, adding that, in case of unforeseen events in credit markets, cash should be made available.