Crisis mounts as world markets dive
Stock markets around the world have plunged again as fears persisted that the global economy could slip back into recession.
The FTSE 100 Index has seen 9.8%, or £147.9 billion, sliced off its value in the past week - its worst performance since October 2008 when Lehman Brothers collapsed and the credit crunch began in earnest.
Markets across the world are in meltdown as traders panic that America will lead the global economy back into recession and the eurozone will be crushed under the weight of its debts.
And there are fears that the crisis could escalate further unless Governments are able to convince financial markets that they are able to pay off their loans.
Prime Minister David Cameron has spoken to his German counterpart, Angela Merkel, about the instability and is in close contact with Chancellor George Osborne. Mr Osborne has also spoken to Bank of England Governor Sir Mervyn King.
Michael Hewson, a market analyst at CMC Markets, warned: "This crisis will run and run, and could make Lehmans look like a Tupperware party."
London's top flight fell 146.2 points, or 2.7%, to 5247, while the CAC 40 in France and the DAX in Germany fell 1% and 3% respectively.
Better-than-expected employment figures from the US were not enough to convince traders that the world's biggest economy is healthy amid rumours that it could lose its cherished AAA credit rating.
There are rising fears that Italy and Spain, the eurozone's third and fourth largest economies, could default on their debt repayments and require EU-funded bailouts. Investors have been switching their cash from risky assets, such as shares, to safe havens like gold, which recently hit fresh highs.
Foreign Secretary William Hague said the Government was "fully functioning" despite Mr Cameron, his deputy Nick Clegg and Mr Osborne all being on holiday.