Europe markets hit by fresh turmoil

A stock trader points to a graph of activity on the French Stock Exchange in Paris this morning.

European markets piled up more losses today as emergency action to shore up Italy and Spain failed to prevent further turmoil.

In a volatile session, the FTSE 100 Index was down another 2% at 5143 as investors prepared for a sharp fall on Wall Street after Standard & Poor’s historic decision to strip the US government of its prized AAA credit rating.

There had been a brief rally for the FTSE 100 after the European Central Bank intervened in the markets for Italian and Spanish bonds, helping to reduce borrowing costs in both countries.

Finance ministers from the world’s major economies also vowed to take “all necessary measures” to support financial stability and growth.

The action by the ECB was well-received by battered UK banking stocks, but with the Dow Jones Industrial Average likely to open more than 200 points lower it was not long before earlier gains were wiped out.

The London market lost 10% of its value last week as nearly £150bn was slashed from the value of the UK’s 100 biggest companies in its worst period of trading since the autumn of 2008.

The continued market turmoil has been bad news for millions of savers who will have seen their pension funds hit dramatically.

Japan’s Nikkei finished more than 2% lower earlier today as Asian markets caught up with the sell-off seen on European markets on Friday afternoon.

Meanwhile, the safer haven of gold pushed to a new record high of over 1,700 US dollars per troy ounce today.

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