Debt Crisis: Stock market bloodbath on new world economy fears
Worldwide shares took a hammering today amid fears the world is sliding into another recession.
A slew of bad news from the US to China also hit already nervy investors.
London's leading shares index fell 4.5pc today - the 9th biggest fall in its history - amid fears for the global economy.
The FTSE 100 Index lost 239.4 points - wiping more than £62.3bn (€71bn) off its value - with heavy losses for the banking sector, including State-backed banks like Royal Bank of Scotland and Lloyds Banking Group.
A Wall Street Journal report said that the US Federal Reserve’s New York unit is taking a closer look at the US operations of Europe's biggest banks, with growing concerns the eurozone debt crisis could spill across the Atlantic.
And a gloomy report from economists at investment bank Morgan Stanley, which slashed its forecasts for global growth, didn’t help much.
But eurozone debt fears, poor economic data in the US, and fears over China raising interest rates and limiting its demand, all played their part in the day's rout.
Frankfurt was also hit hard with the DAX down almost 6pc while Paris fell 5pc.
In the US, figures showed that unemployment benefits in the US rose back above 400,000 last week.
Other figures also showed that consumers paid more for petrol, food and clothes last month.
The US Consumer Price Index rose 0.5pc in July, following a decline of 0.2pc in June and the rise was higher than expected.
When European markets closed, the Dow Jones had lost 3.46pc and stood at 11,015.11 while the Nasdaq was off 4pc at 2,411.11.
(Additional reporting Press Association)