Market plunge wipes £50bn off FTSE

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Global stock markets suffered again today with nearly £50 billion being wiped from the value of London's FTSE 100 Index.

The collapse in share prices comes as investors panic that America could slide back into recession and Italy and Spain may need bailouts.

The FTSE 100 Index fell 191.4 points, or 3.4%, to 5393.1, losing £49.8 billion from its value.

There has been a similar bloodbath on markets across the globe as the Dow Jones Industrial Average in the US, the CAC 40 in France and the DAX in Germany all plunged.

The Dow Jones in the US was down nearly 3% in early trading with Germany's Dax closing 3.4% lower and the French Cac closing nearly 4% lower.

Fears about the global economy intensified today after European Commission President Jose Manuel Barroso warned that the sovereign debt crisis is spreading and issued a rallying call to European leaders to give their "full backing" to the eurozone.

And more weak economic data from the US fuelled worries about the world's biggest economy after a slight rise in the number of people who applied for unemployment benefits.

This came on the back of a raft of disappointing data, including poor manufacturing orders and weak consumer spending.

Investors ploughed their money into safe havens such as gold, which rose to a fresh high of 1,680 US dollars an ounce.

World markets have been on a downward trajectory in recent weeks as the US debt crisis adds to ongoing concerns in Europe.

The vast spending cuts outlined in America's debt-limit deal raised fears over the world's biggest economy falling back into recession.

Meanwhile, some traders and analysts are expecting the US to be stripped of its AAA credit rating, in light of recent weak economic data and its debt-laden public purse.