Markets plunge again as panic continues

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Hundreds of billions more pounds, dollars and euros were wiped off stock market values yesterday as the panic that has shaken the global financial system for the past seven days sent further tremors through stock markets.

It brings the total loss to investors to around $3 trillion (£2trn), including more than £210bn in London alone – about 10 per cent of the total world wealth held in equities.

Investors are growing increasingly fearful that the world is on the brink of a "double-dip" recession – or worse. Governments, trying to cope with crippling debt burdens, now have few resources to fight a renewed downturn by boosting public spending and slashing interest rates as they did in 2008-09. A downturn could thus develop into a full-blown depression.