There were more sharp falls in the stock markets and the IMF says we are 'on the cusp of a recession'. Despite interest rate cuts and bank bail-outs, the mayhem in the markets continues.

'Dark Friday' in world markets - 10 / 10 / 2008 17:33

Wall Street shares fell sharply on the opening in volatile trading, as fears grew of a widespread economic slowdown.

The Dow Jones Industrial Average dipped below 8,000 but then recovered and was down 0.05% at 8,574 points. In Europe share prices falls have been much steeper.

 In London the FTSE 100 share index was down 6.9%, Paris was down 8.4%, and Frankfurt was down 8.9%.

 Investors increasingly fear a global recession, despite interest rate cuts and cash injections by central banks.

Wall Street has lost more than 20% of its value in the past ten trading days and is heading for one of its biggest weekly falls since the Dow was created 112 years ago.

Finance ministers from the G7 are to meet in Washington later and President Bush is to make an address to the American people.

As well as the G7 meeting, talks will be held at the International Monetary Fund (IMF) in Washington.

 In Europe the FTSE 100 share index was down 6.9%. It opened 9.8% lower at 3887 points, below the 4,000-point level for the first time in five years. Paris was down 8.4% while Germany was down 8.9%.

The UK Prime Minister, Gordon Brown, again called on other countries to follow Britain's bank rescue package.

"What we need now is for other countries to be doing similar things," he said.

 He also added that he was confident the bail-out would eventually help stabilise the economy.

"Everybody depends on banks. We're trying to get the banks to do what they've traditionally done, to get the flow of money to businesses, to help people with their mortgages, to make sure people's savings are safe," he said.

In other major developments:

- The British pound tumbled to a five-year low against the US dollar to trade at $1.6902 at one point, but recovered slightly later. It also fell against the euro to 1.245 euros

- Tokyo's shares plunged 24% during the week, double their weekly fall during the 1987 market crash

- Oil prices plummeted to a one-year low in European trading, with the price of Brent crude oil dropping to $77.2 a barrel at one stage.

- The three-month rate at which banks lend dollars to each other - known as Libor - has risen to 4.8%

- Moscow and Jakarta stock markets remain suspended because of excessive volatility -

- The Vienna stock market fell 10% on re-opening after trading was suspended on Friday morning.

Despite concerted government action, investors are increasingly fearful the financial crisis will prompt a global recession "It's a banking problem, it's a credit crisis problem and it's a complete loss of confidence worldwide," said David Buik of BGC Partners in London.

Reuters