Crisis hits US and Europe shares

European and US shares have fallen sharply amid increasing concerns over the state of the world’s economy.
In New York, the Dow Jones industrial average index lost 7.7%, while the S&P 500 dived 8.9%.
Shares in London closed down 5.2%, while Germany’s Dax and France’s Cac40 also fell by more than 5%.
The British pound plunged 4% against the US dollar, from $1.54 to $1.49. It also lost ground against the euro, which traded at £0.85.
The fall in the pound against the dollar was the biggest one day fall in percentage terms since sterling crashed out of the Exchange Rate Mechanism in 1992.
Gloomy figures
Commodity and banking stocks have seen the steepest decline, after economic figures released Monday pointed towards a severe global slowdown.
Markets worldwide have been hit as the monthly index of US manufacturing activity plunged to a 26-year low – a figure worse than analysts expected.
Business confidence surveys released in the eurozone and Britain earlier on Monday reflected similar trends, reinforcing expectations that the European Central Bank and Bank of England will cut interest rates later this week.
Oil prices also fell on Monday after Opec declined to cut production quotas at an informal meeting in Cairo.
„It’s a poor start to December for equity markets, particularly as last week’s rally had generated hopes of a turning point, but the economic news flow doesn’t get any better,“ said Neil McKinnon, chief economist at ECU Group.
Pound under pressure
The pound fell sharply against both the euro and the US dollar on the expectation that UK interest rates would be cut sharply on Thursday.
Figures for new mortgage approvals fell to a record low, suggesting that the UK housing market was still in the doldrums.
It was the sharpest fall in value of the pound since the UK left the ERM in 1992.