Global stock markets tumbled again Wednesday as fear over the health of the US economy and rumours of a possible credit downgrade for France sent investors running for cover.
In London, the FTSE 100 closed down 157.8 points at 5007, as a morning rally evaporated in the face of big falls for all of the main indices on Wall Street, analysts said.
The Dow Jones Industrial Average fell by more than 400 points, giving back all of yesterday’s late rally following a commitment to keep interest rates low until 2013 by the US Federal Reserve.
Bank shares across the UK and the rest of Europe were hit after rumours that France could see its AAA rating downgraded.
The CAC index in Paris and the Dax in Frankfurt both saw falls of more than 4% at one point, while Italy’s main index dropped by more than 5%.