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."

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Sport
Harry Redknapp. Mark Hughes and Ryan Shawcross
footballNews and updates as Queens Park Rangers host the Potters
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
New Articles
i100... with this review
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
New Articles
i100
Arts and Entertainment
musicHow female vocalists are now writing their own hits
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam