European and US stock markets have seen sharp falls as fears have deepened over prospects for the global economy.
London’s FTSE 100 share index fell 1.4% to 6,339.97, a 12-month low, as did Germany’s Dax. France’s Cac-40 fell to it lowest level in 2014.
In the US, the Dow Jones erased its gains for the year, with the tech-heavy Nasdaq tumbling more than 2%.
Poor economic data from Germany this week has stoked fears that the eurozone could be heading for another recession.
Oil prices also saw sharp falls, with the Brent crude price hitting its lowest level for nearly four years.
After recording its biggest one-day fall of the year on Thursday, the Dow Jones dropped another 0.7% on Friday to close at 16,659.25, losing all the gains it has made this year.
The tech-heavy Nasdaq index slumped 2.3% to 4,276.24, led lower by semiconductor makers. Microchip Technology, which cut its sales forecast for the quarter and warned that declines could be expected across the industry, saw its share price fall by 12%.
The broader S&P 500 index fell 1% to 1,906.13.
Oil Falls
The price of Brent crude oil dropped $1.65 to $88.40 a barrel at one point before recovering some ground to stand at $89.64.
US oil fell by $1.92 a barrel to $83.85, its weakest level since June 2012, although it also regained some ground to stand at $89.39. Both oil benchmarks have lost about 20% since their peak in June.
Oil prices have been undermined by a combination of increasing supplies and weakening demand.
Libya has recently increased its supply of oil to the open market, and demand from China, the world’s second biggest user of oil, has slipped as its economic growth has slackened off.
Carsten Fritsch, commodities analyst at Commerzbank, told Reuters the oil markets were now in “panic mode”.
“Panic and capitulation. We are now in uncharted territory,” he said. “The rout will probably continue until [oil cartel] Opec says enough is enough.”
Calm Broken
An average of 7.9 billion shares a day changed hands on US exchanges this week, the most since November 2011, as the Dow Jones Industrial Average erased its 2014 gain. The Chicago Board Options Exchange Volatility Index jumped 46 percent to 21.24, the highest since February.
Three weeks of declines have broken the almost unprecedented calm that had enveloped markets for most of 2014. Eight trading days into October, the S&P 500 has posted six single-day moves exceeding 1 percent. The market went without any swings of that size for 62 days in May, June and July, the longest stretch since 1995.
At the same time, the 5.2 percent decline that started in September is only slightly bigger than the last two retreats that exceeded 3 percent, in April and August. Both gave way to larger advances. At about 15 times forecast earnings, the S&P 500’s valuation has climbed 40 percent from the bottom in 2011, data compiled by Bloomberg show.
