Global shares slide on growth fears

US traders Image copyright AP

Global shares have fallen sharply as concerns about weak global economic growth knock investor confidence.

In the US, the Dow Jones fell by 2.5%, before recovering to 16,141.74, a 1% drop. European markets were also sharply lower.

The Dow is down more than 1,000 points, or 6%, from last month.

Oil prices also continued to slide, with Brent crude falling to $83.78 a barrel and US light crude dipping to $81.78.

Brent crude has fallen by 20% since the summer on concerns of oversupply, as output increases and forecasts for future demand fall because of concerns about sluggish global growth.

On stock markets, the main Cac 40 index in France closed down 3.6%, while Germany's Dax index and the UK's FTSE 100 both ended the day down about 2.8%.

The Athens stock market closed down 6.3% while Greek government bond yields rose sharply.

Elsewhere, government bond prices rose as investors sold equities and looked for the relative safety of fixed-income investments.

Long-term US Treasury prices jumped to two-year highs as yields fell sharply. Bond yields always fall when prices rise, reflecting increased demand for the instruments.

"It typically takes weeks for 10-year Treasuries to move 29 basis points," said Tom Di Galoma at ED&F Man Capital in New York.

"Today it moved 25 basis points in five minutes."

A basis point is a hundredth of a percentage point.

'Weak and uneven'

Recent economic figures have increased fears that the global economic recovery may be running out of steam.

On Tuesday, Germany cut sharply its growth estimates for this year and next, while last week the International Monetary Fund cut its forecast for global economic growth, warning that the recovery was "weak and uneven".

Figures released this week have shown inflation falling to five-year lows in India, China and the UK, prompting some commentators to talk about the possibility of deflation.

Disappointing economic data published on Wednesday helped to undermine investor confidence further.

US retail sales fell by a worse-than-expected 0.3% in September, the Commerce Department reported, while US producer prices dipped 0.1%, the first drop in more than a year, the Labor Department said.

"Incoming economic data is prompting many investors to question their faith in the belief that central bankers can change the economic dynamic with easy monetary policy," said analyst Patrick O'Hare.

"Macroeconomic weakness, and the seeming inability of monetary policy to counteract it, has the market in a selling stupor at the moment."

Central banks have been holding interest rates low to keep borrowing costs down in order to stimulate spending and general economic growth.

Some, including those in the UK and the US, have also been buying up assets with newly created money in a more unconventional bid to boost lending and growth.

Related Topics

More on this story