Growing fears about the global credit squeeze today hammered British and Swiss financial firms known to be exposed to the crisis.
Banking shares dragged European stock markets lower, and some experts said there was no room for optimism until or unless the US stock market showed sustained signs of buoyancy.
Shares in UBS tumbled on concerns that the Swiss-based bank will suffer additional losses due to exposure on assets hit by the US subprime mortgage crisis.
UBS moved last week to quash rumours of an $8 billion writedown to follow $3.4 billion in mainly subprime-related losses in the third quarter.
Shares in Swiss Re were briefly suspended after they too dropped sharply. Yesterday, the world's largest reinsurer said it expected a $1.07 billion writedown from exposure to credit default swaps.
In Britain, trading in Northern Rock stock was also halted after it slumped more than 41 per cent.