By Dylan Bowman and Reuters
European stocks drop sharply, tracking falls in Asian and US equities as fears of global recession grow.
European stocks tumbled at the open on Friday, tracking plunges in Asian and US equities as investors feared world governments' attempts to unlock credit markets would not be enough to ward off a global recession.
The crash does not bode well for Gulf markets when they open again on Sunday after the weekend break, with analysts forecasting further losses in global markets could see markets in the region continue to fall next week.
At 0713 GMT, the pan-European FTSEurofirst 300 index was down 8 percent at 847.8 points, after hitting its lowest level since July 2003. The index has fallen more than 22 percent so far this week, on track for its worst week on record.
Battered banks led the decline, with Barclays off 15.6 percent, Santander down 9.8 percent and HSBC down 4.3 percent. Oil shares also tumbled, with BP and Royal Dutch Shell down 8 percent and 5.9 percent, respectively, as crude fell 4.6 percent.
The US government is weighing guaranteeing billions of dollars in bank debt and temporarily insuring all US bank deposits, in a bid to unfreeze bank lending and staunch massive losses in equity markets, The Wall Street Journal reported.
Japan's Nikkei 225 fell nearly 10 percent on Friday, while Wall Street's Dow Jones industrial average shed more than 7 percent on Thursday.
"The stark reality is that markets have judged the co-ordinated interest rate cut not to have been enough, and we are now left wondering how best to get ourselves out of this downward spiral," said Chris Hossain, senior sales manager, ODL Securities. "One gets the feeling that this market is now strictly confined to the brave."
Britain's FTSE 100, France's CAC and Germany's DAX were all trading down about 8 percent, having earlier fallen as much as 10 percent.
Markets across the Gulf witnessed some of their heaviest losses on record this week despite a late rebound on Thursday.
Fears over the escalating global financial crisis and its impact on the region saw markets in Dubai, Abu Dhabi and Saudi Arabia losing an average of 20 percent in the week following the Eid Al-Fitr holiday, dragged down by real estate and banking stocks.
Kuwait, Qatar, Oman and Bahrain also suffered heavy losses, with Doha and Muscat’s benchmarks seeing double-digit drops over the last five days.