Shares sent tumbling again by global fears

Seven days on from Black Monday - when global bourses had their worst day since 9/11 in 2001 - the FTSE 100 plunged 2% after a night of further carnage in Asian markets.

"There is a sense that this just the beginning," said Manoj Ladwa, equity derivatives broker with TradIndex. "This could go on for days, if not weeks.

"Trading volumes are fairly low. There is very little money in the market. People are sitting on their hands, which is not helping the volatility."

Traders said uncertainty will continue to grip the market until news on US interest rate cuts from the Federal Reserve on Wednesday. Many believe the market is damned either way.

The feeling is a half-point cut in US rates is already priced in to equity markets, but that a half-point cut would also exacerbate fears that America is heading for recession. If the Fed fails to cut by half a point, markets could tumble on the grounds that not enough is being done to save the US economy.

With all eyes on the Fed, global markets slid lower. The blue-chip index in London fell 143.9 points to 5725.1. On the Continent, the main European indices were in reverse again. As New York opened for business, the Dow Jones lost another 58.90 points to 12,148.30 adding to selling pressure elsewhere.

In Paris, the CAC 40 was down 2% or 100.57 points to 4777.5, while the DAX in Frankfurt fell 1.5% or 98.5 points to 6718.24. Europe was following Asia, which in turn had taken its cue from a sharp fall on Wall Street in late Friday trading, ending a week in which the Fed's three-quarter-point interest rate cut last Tuesday failed to halt the slide.

In Tokyo overnight, the Nikkei Average plunged 4% as the index factored the teetering US economy into fears the Japanese economy is slipping into a downturn. The shares sell-off was more marked in China, where both the main Shanghai exchange and the Hang Seng index in Hong Kong were badly hit.

The Shanghai Composite was down 342.39 points, or 7.2%, at 4419.29 while the Hang Seng was off 1068.76 points, or 4.3%, at 24,053.61.

Stock-market watchers fear a repeat of the 1987 crash, when indices were hit by shockwaves over several days. The growing global panic was not helped by comments from Dominique Strauss-Kahn, managing director of the International Monetary Fund, who said rate cuts alone would not be enough to get the worldwide economy moving again.

"I don't think we would get rid of the crisis with just monetary tools," Strauss-Kahn said. He expected greater fiscal interventions by states around the world to boost domestic economies.