Global markets tumble to four-year low on fears of new economic slowdown

The sharpest decline in European stocks since 2011 has been followed by a second day of volatile trading as investors flee risk because of global economic weaknesses. Many stock markets, including the FTSE 100, recovered some ground lost on Wednesday in early Thursday trading - helped by some encouraging corporate results- though jitters soon outweighed the search for bargains. The FTSE 100 was down 2 percent in late-morning trade, after a 2.8 percent drop on Wednesday, but losses came off the boil as the session wound down. It was a series of weak reports on the health of the two biggest economies in the world that sparked the big sell-off.

Mounting concerns about global growth, deflation worries in Europe and ongoing geopolitical risk are spooking the markets. Higher beta sectors such as banks are bearing the brunt of the sell-off.

Robert Parkes, equity strategist at HSBC

Hours after Chinese inflation data disappointed - falling to a near five-year low - it was revealed that US retail sales and producer prices both dropped last month. And it was euro area weakness that dominated trading on Thursday. The latest inflation figures for the eurozone showed annual growth of just 0.3 percent across the single currency bloc, doing nothing to dispel fears the European Central Bank’s (ECB’s) previous rate measures to boost activity had failed to make the grade. It is facing increasing demands to start a programme of quantitative easing. The International Monetary Fund recently forecast a 40 percent chance of eurozone recession.

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