The US unemployment rate shot up to near-five year highs today, marking the clearest sign yet that the world's biggest economy is now in full-blown recession.

London shares tonight followed Wall Street down on the news, adding to the big share losses yesterday.

Figures this afternoon showed 6.1% of Americans are now out of work, after 84,000 jobs were lost in August.

The count was far worse than economists had expected. They had forecast the rate would stay at last month's 5.7%.

Shares on Wall Street extended yesterday's rout as traders worried about the outlook for the US economy.

To make matters worse, the Labor Department, which compiles the figures, revised up their figures for June and July after taking stock of new information on job cuts.

"The economy is clearly deteriorating," said Gary Thayer, senior economist for Wachovia Securities.

David Resler, chief economist of Nomura Securities, added: "We're running job losses that are typically seen in the early stages of an economic recession. We're probably in one now."

Job cuts hit every sector of the economy, from manufacturing and business services to construction and leisure.

"We're losing jobs in all kinds of industries now," said Roger Kubarych, chief US economist at UniCredit Global Research.

"This is the clearest recessionary signal we've seen."

The Dow Jones Industrial Average added to yesterday's sharp falls with a further 95.1-point drop to 11,093.1.

That marked a tumble of nearly 4% on the week. London shares followed their lead, off 67.9 to 5294.2. The FTSE has now fallen nearly 6% since the start of the week, or more than 300 points.

Figures out later this afternoon showed US repossessions hit record highs in the second quarter.

The percentage of mortgage loans going into foreclosure during April, May and June was 1.19%, against 0.99% in the first three months of the year.