Stocks tumble across the globe

Stock markets across the world felt the shuddering impact yesterday of the Bear Stearns collapse. Words such as "crash" and "panic" reverberated over the trading floors, with fears of worse to come. Its effects were felt from Tokyo to New York, knocking down the paper value of almost any business that might be exposed to the credit crunch.

Richard Granville, a market analyst in Kansas City, warned: "We're in a crash. This is the worst I've seen" At the age of 84, he has seen them all: he can remember his father, a banker, coming home in a cloud of gloom during the 1929 crash that ushered in the Great Depression.

The slump in prices began in New Zealand, the first stock market to open in the Asia-Pacific region, with shares falling by 1.9 per cent in early trading. It was worse in Australia, with an early fall of 2 per cent, and worse still in Tokyo, where exporters were worrying about the rising value of the yen. One US dollar now buys fewer Japanese yen than at any time since 1995. The Nikkei average fell 3.7 per cent to its lowest level since August 2005. The TOPIX index hit its lowest level since June 2005.

And so on across the globe. Hong Kong's Hang Seng fell 5.2 per cent to its lowest level since August. The Korea Composite Stock Price Index in Seoul declined more than 2.5 per cent. In Mumbai, the Sensex was down 6.5 per cent.

When European trading opened, the FTSEurofirst 300 fell 3.2 per cent. In London, the FTSE 100 index was down 2.7 per cent; in Paris, the CAC 40 slumped 2.9 per cent and in Frankfurt, the DAX fell 4.1 per cent.

With people turning to gold, the price continues to rise: it has increased by 21 per cent so far this year.