The IEA's move to rein in oil prices added to the anxieties of stock market investors around the world yesterday, prompting a rollercoaster ride on leading exchanges as the contagion spread.
Investors in the Far East began the sell-off, with new data from China suggesting a slowdown in its economic growth further spooking markets only hours after Ben Bernanke, the chairman of the US Federal Reserve had warned of a slowdown in the world's largest economy on Wednesday night. HSBC said growth in China's manufacturing sector had almost come to a halt this month.
The share price falls across Asia saw a nervous opening on European markets where the sovereign debtcrisis in Greece continues to weigh heavily on sentiment. Asked to gauge the seriousness of the financial instability on the basis of a traffic-light system, Jean-Claude Trichet, the President of the European Central Bank, said the risk signals were now flashing "red".
In the UK, the FTSE 100 index lost almost 100 points on the day, closing 1.7 per cent down, while there were even more significant sell-offs in France, Germany and Spain.
On Wall Street, however, the Dow Jones reversed a 1.9 per cent loss to end down 0.5 per cent at 12,050 amid reports of deal between Greece and the EU and IMF. Poor jobless figures had added to the gloom alongside rising fears rising about the failure of the White House to secure a political agreement on raising the debt ceiling.
Stock market volatility was accompanied by falling commodity prices, while currencies also slipped – both the euro and the pound fell sharply against the dollar.
"Everyone is running away from any sort of risk today," said David Jones, the chief market strategist at IG Index. "The big cloud is Greece, but every day something else seems to come along."