European shares fell back into negative territory in volatile trade today mirroring a weak performance on Wall St as US giant Intel's disappointing outlook sparked fresh concerns about a looming US recession.
The pan-European FTSEurofirst 300 index was down 0.9 per cent at 1,383.03 points, edging closer to the day's low of 1,372.15, which was the lowest level since September 2006.
In the United States, the Dow Jones industrial average was down 0.4 percent, having spiked into positive territory earlier in the session.
The Iseq index of Irish shares also fell 2 per cent in early morning trade but recovered later in the day, to be trading at 6,454, only 24 points down.
Yesterday it fell 3.7 per cent wiping some €3.2 billion off the value of the companies listed on the index.
Tokyo's Nikkei-225 index fell to its lowest level in more than two years overnight while London's FTSE-100 slumped to a six-month low shortly after opening.
This afternoon the FTSE fell 70 points or 1.2 per cent to 5,956 while the German DAX fell 1 per cent or 76 points to 7,490.
Investors saw more damage from the US credit crisis when Citigroup yesterday said it had written down $18.1 billion in bad assets. A surprise fall in retail sales added to the view the US economy may be heading for recession.
"It looks like markets are now realising that the credit crisis in the United States is far away from being over and there are further risks arising that are further down the chain," said Heino Ruland, a strategist at FrankfurtFinanz in Frankfurt.
One of the day's biggest fallers on the Dublin market was drinks group C&C, which saw its shares fall 8 per cent on speculation that it may issue a fresh profit warning ahead of tomorrow's trading update.
However the downward trend was led by the financials with Anglo Irish Bank down over 3 per cent, Bank of Ireland down 1.3 per cent and Irish Life and Permanent down 3.23 per cent.
Concerns about the US financial system were also felt in the currency market, which sent the US dollar below 106 yen, its lowest since May 2005.
There is also growing fear that the Federal Reserve hasn't done enough to keep the US economy going. The central bank has lowered its key interest rate by a full percentage point to 4.25 per cent since early August.
Now many investors and analysts believe the Fed will cut rates by a half-point at its January 29th to 30th meeting.
But some believed the concerns about the US economy were overblown.
Still, in Tokyo, the region's biggest market, worries about the yen's appreciation contributed to big declines in major Japanese exporters Honda Motor, which shed 4.9 per cent, and Sony, which plunged 6.8 per cent.
In China, the benchmark Shanghai Composite Index fell 2.8 per cent to 5,290.60. The index has gained 0.6 per cent since the beginning of the year, compared with losses in most other Asian markets.