Stocks tumbled around the world on Monday as several markets registered their deepest declines in years. VOA's Barry Wood reports that $2 trillion of value was wiped out in just a single trading day.
The steepest declines were in Europe and developing countries. All 18 West European stock markets were down sharply. London's main market average fell nearly nine percent, its biggest drop in nearly two decades. The Russian index fell 19 percent. In Brazil and Russia trading was briefly halted.
The panic selling followed a weekend in which several central banks took action to insure deposits to prevent a run on savings institutions. A German and a Dutch bank were rescued by government action. The euro, used in 12 European Union countries, fell by a record six percent against the Japanese yen and was down sharply against the U.S. dollar. The U.S. currency is at a 14 month high against the euro at $1.34. Gold soared five percent and oil sank below $89 a barrel.
In New York, the Dow Jones Industrials closed down 370 points at 9.956. The index had been down 800 points earlier in the session. It is the lowest Dow close in four years.
Economists are expecting early action to reduce global interest rates as part of a coordinated strategy to keep economies growing. Many experts say the U.S. economy has slipped into recession as the stock market is down 30 percent from its October 2007 peak and consumer spending is slowing.
Sandy Batten, an economist at JP Morgan Chase bank, anticipates a long and deep recession.
"In terms of our forecast, I think we're expecting a recession we haven't seen the depths of in the last 20 years, although we have had only two [deep] recessions for the past 30 years," said Sandy Batten.
The down markets follow last week's approval of a $700 billion U.S. measure to buy up the bad loans of U.S. banks. Some analysts say market participants believe the problem requires an even larger government response. Estimates are that financial institutions have lost nearly $1 trillion on bad loans associated with the downturn in the U.S. real estate market. Portions of those loans were sold to financial institutions around the world.