Global stock markets have sunk again as worries about the downgrade of US debt outweighed relief at a European Central Bank pledge to buy up Italian and Spanish bonds to help the two countries avoid devastating defaults.
European markets lost early momentum and most were trading sharply lower amid mounting fears over the opening of US markets, when traders will have their first chance to respond to Standard & Poor's decision to lower its triple A rating.
Investors remain worried about the state of the world economy and policymakers' ability to deal with the European debt crisis, said Neil MacKinnon, global macro strategist at VTB Capital.
"Investors are concerned about a rising risk of global recession, credit downgrades especially now in the eurozone, such as France, the threat of a major bank bust and a global liquidity trap as investors stay in cash," MacKinnon said.
Those concerns trumped any relief European markets got from the sharp fall in Italian and Spanish bond yields after the European Central Bank said it would buy the two countries' bonds in order to help them avoid devastating defaults.
Sentiment in Europe has not been helped at all by the expected sell-off at the US opening.
Late Sunday, Europe's central bank said it would "actively implement" its bond-buying programme to calm investor concerns that Italy and Spain will nott be able to pay their debts. Last week, worries over the two countries' ability to keep tapping bond markets contributed to the turmoil in global markets, which saw around $1.5 trillion wiped off share prices.
Seeking to avert panic spreading across financial markets, the finance ministers and central bankers of the Group of 20 industrial and developing world also issued a joint statement Monday saying they were committed to taking all necessary measures to support financial stability and growth.