Markets in meltdown amid new global recession fears

Friday, August 19, 2011
By Paul Martin

Frenzied selling wipes £62bn off value of FTSE and Dow Jones plummets in another tumultuous day for world economy

By Heather Stewart
Guardian.co.uk

Financial markets on both sides of the Atlantic were convulsed by a fresh wave of selling amid fears that the world economy is sliding back towards recession.
The FTSE 100 closed down 239 points, or 4.5%, at 5092, wiping more than £62bn off its value. By late afternoon on Wall Street, the Dow Joneswas down by 480 points, or 4.2%.
Growing disarray in the eurozone over the latest bailout for Greece, weak American manufacturing figures and a warning from Wall Street bank Morgan Stanley that the US and Europe are “hovering dangerously close to recession” all contributed to the mood of panic.

A closely watched gauge of the US manufacturing sector produced by the Philadelphia Federal Reserve plunged, underlining fears that the recovery has ground to a halt.

The yield on benchmark 10-year US Treasury bonds, which measures the cost of borrowing for the American government, slipped below 2%, as investors sought a haven from the storm. Gold, which has soared in value this year, hit another new record of $1,825 (£1,106) an ounce.

Sal Catrini, managing director for equities at Cantor Fitzgerald in New York, said: “The market is in meltdown mode; the data continues to stink. I don’t know that there’s much more to be said.”

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