• US manufacturing spark selling
• Oil price slips
• Japan's Nikkei down 11% in worst performance since 1987
• Oil price slips
• Japan's Nikkei down 11% in worst performance since 1987
Graeme Wearden and Dan Milmo guardian.co.uk, Thursday October 16 2008 16.15 BST
Fears of a global recession sent world stockmarkets falling across Asia, Europe and the US this afternoon, with the Footsie heading towards its lowest point in more than five years and the Dow Jones slumping.
Another batch of poor manufacturing figures from the US sparked a further wave of selling by investors in New York, as the Federal Reserve reported US industrial production in September suffered its biggest drop since 1974.
The Dow Jones fell by nearly 200 points to 8388 in early trading this afternoon, giving up modest early gains.
An influential regional factory output survey, from the Philadelphia Federal Reserve Bank, compounded the gloom by reporting an 18-year low in factory activity.
"The Philly Fed data provides the first reliable lead into the October numbers and confirms that the meltdown in financial markets is being closely followed by a dramatic slide in real economic activity," said Alan Ruskin, the chief international strategist at RBS Global Banking.
Earlier today, the panic selling that began on Wall Street yesterday evening spread around the globe as investors lost faith that Europe and America's bank rescue packages would stave off an economic downturn.
In London, the FTSE 100 fell by almost 6% in the first few minutes of trading to just 3840.6, its lowest level during the recent crisis. Although it later bounced back, attempts at a more solid rally faltered after the Dow Jones maintained its downward trajectory this afternoon.
By 3.45pm, the FTSE 100 was down more than 200 points at 3872, a 5% drop.
The FTSE's performance followed an 11% plunge on Japan's Nikkei, its worst daily fall since 1987.
There was little sign of optimism in the City this morning.
Antonio Borges, a former vice-president of Goldman Sachs, warned that investors are panicking, selling shares in favour of cash. "The markets are very, very volatile because we do have a crisis of confidence, so the slightest piece of bad news throws the markets into disarray," he said.
One analyst warned that shares may have much further to fall. "Unless something remarkable happens, it looks like the FTSE 100 will test the low of 3287 that it hit in March 2003," warned David Buik of BGC Partners.
"Regarding a recession – we are in it."
Earlier today, Jaguar Land Rover cut almost 200 jobs, and Corus slashed steel production for the rest of the year by 20%.
This follows a raft of evidence on Wednesday that the wider economy has been damaged by the financial crisis.
In the UK, the jobless total hit 1.79 million, and is expected to break through 2 million by Christmas.
Across the Atlantic, yesterday's 733 point plunge on the Dow Jones index was prompted by a shock drop in retail sales and a grim warning from Ben Bernanke. The Federal Reserve chairman said that the frozen credit markets posed a big risk to the wider economy.
"By restricting flows of credit to households, businesses, and state and local governments, the turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth," Bernanke told the Economic Club of New York.
The price of oil slipped again today, with a barrel of US crude oil falling another $3 to $71.73 on expectations of lower demand.
Markets had rallied on Monday as the world's governments began taking action to pump capital into their struggling banks.
But in Japan, where the Nikkei fell 11.4% to 8458, the prime minister, Taro Aso, said America's $250bn (£145bn) injection into the banks did not go far enough. "It was insufficient, and so the market is falling rapidly again," Aso said.
Borges agreed that the optimism over the bail-out may have been misplaced. "After the government guarantees, it is fair to expect that the banking sector will go back to a more normal state. The problem is, however, that this may have come a bit too late and, meanwhile, the consequences of the credit crunch are beginning to be felt across the economy," Borges told BBC Radio 4's Today programme.
Hong Kong's Hang Seng index fell by 8.5%, with China's Shanghai Composite down almost 4% in late trading.
Another batch of poor manufacturing figures from the US sparked a further wave of selling by investors in New York, as the Federal Reserve reported US industrial production in September suffered its biggest drop since 1974.
The Dow Jones fell by nearly 200 points to 8388 in early trading this afternoon, giving up modest early gains.
An influential regional factory output survey, from the Philadelphia Federal Reserve Bank, compounded the gloom by reporting an 18-year low in factory activity.
"The Philly Fed data provides the first reliable lead into the October numbers and confirms that the meltdown in financial markets is being closely followed by a dramatic slide in real economic activity," said Alan Ruskin, the chief international strategist at RBS Global Banking.
Earlier today, the panic selling that began on Wall Street yesterday evening spread around the globe as investors lost faith that Europe and America's bank rescue packages would stave off an economic downturn.
In London, the FTSE 100 fell by almost 6% in the first few minutes of trading to just 3840.6, its lowest level during the recent crisis. Although it later bounced back, attempts at a more solid rally faltered after the Dow Jones maintained its downward trajectory this afternoon.
By 3.45pm, the FTSE 100 was down more than 200 points at 3872, a 5% drop.
The FTSE's performance followed an 11% plunge on Japan's Nikkei, its worst daily fall since 1987.
There was little sign of optimism in the City this morning.
Antonio Borges, a former vice-president of Goldman Sachs, warned that investors are panicking, selling shares in favour of cash. "The markets are very, very volatile because we do have a crisis of confidence, so the slightest piece of bad news throws the markets into disarray," he said.
One analyst warned that shares may have much further to fall. "Unless something remarkable happens, it looks like the FTSE 100 will test the low of 3287 that it hit in March 2003," warned David Buik of BGC Partners.
"Regarding a recession – we are in it."
Earlier today, Jaguar Land Rover cut almost 200 jobs, and Corus slashed steel production for the rest of the year by 20%.
This follows a raft of evidence on Wednesday that the wider economy has been damaged by the financial crisis.
In the UK, the jobless total hit 1.79 million, and is expected to break through 2 million by Christmas.
Across the Atlantic, yesterday's 733 point plunge on the Dow Jones index was prompted by a shock drop in retail sales and a grim warning from Ben Bernanke. The Federal Reserve chairman said that the frozen credit markets posed a big risk to the wider economy.
"By restricting flows of credit to households, businesses, and state and local governments, the turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth," Bernanke told the Economic Club of New York.
The price of oil slipped again today, with a barrel of US crude oil falling another $3 to $71.73 on expectations of lower demand.
Markets had rallied on Monday as the world's governments began taking action to pump capital into their struggling banks.
But in Japan, where the Nikkei fell 11.4% to 8458, the prime minister, Taro Aso, said America's $250bn (£145bn) injection into the banks did not go far enough. "It was insufficient, and so the market is falling rapidly again," Aso said.
Borges agreed that the optimism over the bail-out may have been misplaced. "After the government guarantees, it is fair to expect that the banking sector will go back to a more normal state. The problem is, however, that this may have come a bit too late and, meanwhile, the consequences of the credit crunch are beginning to be felt across the economy," Borges told BBC Radio 4's Today programme.
Hong Kong's Hang Seng index fell by 8.5%, with China's Shanghai Composite down almost 4% in late trading.
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