Worst quarter since Lehmans for Europe's stock markets

European shares have suffered their biggest quarterly fall since the collapse of Lehman Brothers, driven by fears over the eurozone debt crisis and by slowing global growth.

World stocks fell as the market set aside Thursday's brief respite to end a turbulent third quarter on a grim note.

The pan-European FTSEurofirst 300 index closed down 1.6 per cent at 918.44 and 17.3 per cent lower for the quarter. The drop was the worst since the final three months of 2008 when Lehman's bankruptcy triggered the worst recession since the 1930s.

Britain's FTSE 100 index had its worst quarterly drop since the third quarter of 2002, dropping by 13.7 per cent to 5,128.48 in the fourth-worst period on record and losing a total of £212bn in value.

Louise Cooper, a markets analyst at BGC Partners, said: "A perfect storm of appalling bad news has driven prices lower – inadequate policy response, fears of a recession, and the intensification of the sovereign debt crisis."

The eurozone's woes worsened yesterday when figures revealed a jump in inflation to a three-year high last month. The unexpected rise to 3 per cent restricts the European Central Bank's room to cut interest rates amid stalling economic growth.

The euro slipped against the US dollar and was on course for its biggest monthly drop in nearly a year, weighed down by lack of decisive action on the region's debt crisis.

The single currency fell to lows at $1.34263 and was down 1.1 percent in late afternoon trading. September's fall of 6.6 per cent was the euro's weakest showing since November 2010.

European shares and the single currency were boosted on Thursday by Germany's approval of new powers for the eurozone bailout fund. However, data yesterday showed German retail sales in August dropping at their fastest in more than four years.

Chinese manufacturing contracted in August for the third straight month, suggesting Asia's growth engine was slowing and the world economy was weakening sharply. Gold, a safe haven, rose more than 1 per cent and had its biggest quarterly gain this year.

Markets gyrated in September as traders veered between preparing for a Greek debt default and hoping that the eurozone's major powers would act to stave off disaster.

The Chicago Board Options Exchange's Vix index, or "fear gauge", which measures volatility in equity markets, has surged as investors have rushed to protect investments.

The barrage of gloomy market news came as Goldman Sachs' economists warned of a "Great Stagnation" unless action is taken to boost growth.

Jose Ursua, a Goldman Sachs economist in New York, wrote: "The prospect of a long period of stagnant growth is a plausible risk for the major developed economies." He continued: "Whether these countries manage to avoid a 'Great Stagnation' by a pick-up in the recovery is likely to depend on policy being able to restore 'confidence and putting in place reforms that can decisively jolt growth."

Renee Zellweger as Bridget Jones
Arts and Entertainment

Russell Brand at an anti-austerity march in June
peopleActor and comedian says 'there's no point doing it if you're not'
Arts and Entertainment
Banksy's 'The Girl with the Pierced Eardrum' in Bristol
art'Girl with the Pierced Eardrum' followed hoax reports artist had been arrested and unveiled
Oscar Pistorius is led out of court in Pretoria. Pistorius received a five-year prison sentence for culpable homicide by judge Thokozile Masipais for the killing of his girlfriend Reeva Steenkamp
voicesThokozile Masipa simply had no choice but to jail the athlete
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Sister Cristina Scuccia sings 'Like a Virgin' in Venice

Like Madonna, Sister Cristina Scuccia's video is also set in Venice

Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004

Singer says the track was 'force-fed down people's throats'

Life and Style
The Tinder app has around 10 million users worldwide

techThe original free dating app will remain the same, developers say


Endangered species spotted in a creek in the Qinling mountains

peopleJust weeks after he created dress for Alamuddin-Clooney wedding
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album