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Anxiety drags down European markets Anxiety drags down US and European stock markets
(about 3 hours later)
London's top shares have fallen nearly 2.4%, while other European markets have seen even bigger falls, amid anxiety about the health of the global economy. The index of London's leading shares has fallen 1.5%, while US and European markets have also posted sharp declines amid continued anxiety about the state of the global economy.
By lunchtime, the FTSE 100 index was down 135.32 points to 5,536.98. The FTSE 100 was down 83 points at 5,587 points in afternoon trading.
At the same time, share indexes in Frankfurt and Paris were down 2.7% and 3.8% respectively. Markets in Frankfurt and Paris were down 1.8% and 2.9% respectively.
Analysts said US Federal Reserve boss Janet Yellen's gloomy economic assessment on Wednesday had added to investors' worries. Wall Street has also opened lower, with the S&P 500 and Dow Jones indexes fall about 1.3% in early trading.
In testimony to Congress, Ms Yellen said financial conditions in the US had become "less supportive" of growth and warned of the "increased volatility" in global financial markets. Analysts said US Federal Reserve chair Janet Yellen's gloomy economic assessment on Wednesday had added to investors' worries.
In testimony to Congress, she said that financial conditions in the US had become "less supportive" of growth and warned of the "increased volatility" in global financial markets.
Rabobank European strategist Emile Cardon said the worst could still lie ahead: "The bad news in now coming from everywhere - China, Portugal, the US, the commodity sector, the banking sector. It's like several smaller crises could combine into one big crisis."
Analysis: Kamal Ahmed, economics editorAnalysis: Kamal Ahmed, economics editor
The great sell off continues. The great sell off continues. Why?
Why?
It's a mix - part economic fundamentals; part market emotion, as herding investors follow each other down a negative spiral, fearful of being left beached as the tide goes out; and part brute market forces, the major trading houses looking to make a profitable turn on share prices which they bet are not going up any time soon.It's a mix - part economic fundamentals; part market emotion, as herding investors follow each other down a negative spiral, fearful of being left beached as the tide goes out; and part brute market forces, the major trading houses looking to make a profitable turn on share prices which they bet are not going up any time soon.
Read Kamal in fullRead Kamal in full
Coco bonds: what are they and why have they hit bank shares?Coco bonds: what are they and why have they hit bank shares?
Why use negative interest rates?Why use negative interest rates?
On the FTSE 100, the biggest losers were a mix of financial firms and mining stocks.On the FTSE 100, the biggest losers were a mix of financial firms and mining stocks.
Barclays was the worst performing bank, sliding 6.2% Barclays was the worst-performing bank, sliding 5.9%. Its shares have fallen by almost a third since the start of this year, leaving it worth £25bn.
Mining giant Rio Tinto fell 3.7% after it revealed that it had made an annual loss of £596m. That is about the same value as Royal Bank of Scotland, whose shares have fallen more than a quarter this year.
Fellow miners Glencore and Antofagasta shed 5.4% and 1.8% respectively. Falls in bank shares this year
However, other firms in the sector fared better. Randgold Resources rose 6.6%, while Fresnillo added 6.9%. Mining giant Rio Tinto fell 3.9% after it revealed that it had made an annual loss of £596m.
In Paris, Societe Generale bank was particularly hard hit, falling more than 13%. Fellow miners Glencore and Antofagasta shed 6.3% and 2.3% respectively.
The bank's share price tumbled after it said it was scrapping its target of obtaining a 10% return on equity by the end of this year. However, others in the resources sector fared better, with Randgold Resources rising 7.4%, while Fresnillo added 6.8%.
In Frankfurt, Deutsche Bank was down about 8%, as its share price continued to suffer from concerns about the strength of its balance sheet. In Paris, the bank Societe Generale was particularly hard hit, falling more than 11%.
The bank's shares tumbled after it said it was scrapping its target of achieving a 10% return on equity by the end of this year.
In Frankfurt, Deutsche Bank was down 6.3%, as its share price continued to suffer from concerns about the strength of its balance sheet.
Banks are under pressure across Europe because of fears that exposure to bad loans may leave them ill-prepared to cope if the global slowdown intensifies.Banks are under pressure across Europe because of fears that exposure to bad loans may leave them ill-prepared to cope if the global slowdown intensifies.
On the commodities markets, Brent crude was down 1.6% to $30.34, while US light crude fell 3.9% to $26.38. US banks such as Citigroup and JP Morgan also fell on Thursday, with declines of 4.5% and 3.6% respectively.
On the currency markets, the pound hit a 13-month low against the euro, falling 1.12% to €1.2719. On the commodities markets, Brent crude was down 1% to $30.54, while US light crude fell 2.1% to $26.87.
The currency was also down 0.71% against the dollar at $1.4420. On the currency markets, the pound hit a 13-month low against the euro, falling 0.9% to €1.2744.
The currency was also down 0.5% against the dollar at $1.4454.