European and US stocks plunged by more than three per cent and safe-haven gold hit a record peak yesterday as eurozone woes and more weak US data sparked concern that the world could be heading for another sharp downturn.
London’s benchmark FTSE 100 index of top shares fell 3.43 per cent to 5,393.14 points, retreating to territories last seen in September 2010.
In Frankfurt the DAX fell 3.40 per cent to 6,414.76 points and in Paris the CAC 40 dropped 3.90 per cent to 3,320.35 points.
Lisbon slid 3.26 per cent, Madrid sank 3.89 per cent, Swiss stocks fell 3.61 per cent, Amsterdam dropped 3.9 per cent, Stockholm ended down 4.6 per cent and Helsinki plunged 5.05 per cent.
Milan had tumbled 3.23 per cent around 1500 GMT when calculation of the index was stopped for unspecified reasons.
Markets took a beating after the European Central Bank announced that it would resume emergency credit-easing measures that were last adopted at the height of the global financial crisis.
However the ECB did not state openly the extent of its purchases of eurozone government bonds and signalled downside risks to the slow growth it expects for Europe.
Investor sentiment remains plagued by worries that debt-laden pair Italy and Spain could be engulfed by the fast-moving eurozone debt crisis.
Meanwhile on Wall Street, the Dow Jones Industrial Average was down 2.66 per cent at 11,580.00 at 1600 GMT, recovering slightly after having dropped more than three per cent in late morning trade.
The broader S&P 500 was off 3.03 per cent to 1,222.21, while the tech-heavy Nasdaq Composite sank 3.22 per cent to 2,606.39.
“Stocks have retreated deeper into the red to set a new 2011 low. The bleeding continues to be broad-based,” said Briefing.com.
“European banking stocks are under pressure as contagion fears work their way into Italy, the third largest economy in the eurozone.”
Gold meanwhile scored a new record at $1,681.65 per ounce as investors flocked to the precious metal, regarded as a safe bet in times of economic turmoil.
It retreated slightly to close at $1,679.50.
The euro slid to $1.4171 from $1.4318 late on Wednesday.
US weekly claims for unemployment insurance remained at a high 400,000 last week, the Labour Department said yesterday, as business and government layoffs persisted while new job creation remained weak.
The figures, for the week to July 30, stoked fresh concern on the eve of publication of the all-important US non-farm payrolls report.
“There is a deep concern about global growth and of the state of play in the United States in particular,” said City Index analyst Giles Watts.
“Traders are growing increasingly concerned about a sharp slowdown in US economic activity in the third quarter.”
He added: “Add to the mix existing tensions over Italy and Spain being dragged into the sovereign debt crisis and a sour taste of corporate earnings over the last fortnight, and one can easily rationalise that with a market devoid of positive factors this week, losses have quickly escalated.”