London braved a meltdown on global stock markets on Tuesday as they suffered their most drastic crisis since the 1987 Black Monday.
Prices in London, Europe's top market, fell in their worst point-loss ever.
After a half hour of trading, the Financial Times-Stock Exchange 100-share index was off 457.9 points, or 9.5 percent, at 4,382.8.
The domino-effect that has affected markets in southeast Asia reached global proportions, battering major markets in Asia and Europe after Wall Street closed early on Monday following a seven per cent drop.
Analysts cited turmoil in Hong Kong as the main trigger, although they said a meltdown was waiting to happen, with stock markets in general being overvalued.
London braved a meltdown on global stock markets on Tuesday, and the FTSE 100 index of Britain's leading shares responded with a slide of nine per cent to historic losses on Wall Street.
The FTSE 100 fell 9.31 per cent, or 450 points to 4-thousand-390 by 0855 G-M-T.
That compares with the previous record fall of the "footsie," 250 points, on Black Monday, Oct. 19, 1987, a drop that wiped out 12.5 percent of the index's value.
At Citibank, early trading in foreign currencies was frantic.
As London markets opened, investor worries were high.
Analysts said the fundamentals were very different to those in 1987, when the Dow crashed 22.6 per cent.
But they said there were still serious ramifications to the current crisis.
"I think that what we are seeing now is a stock market crash. It is comparable I think with the events ten years ago. I think that if anything the effects are much more widespread. In the meantime, central banks around the world will do what they did in 1987. They will ensure that there is sufficient liquidity to prevent any knock-on effects on the real economy, and that means that the American Federal Reserve for example will postpone any interest rate increases that they may have been planning here in the U-K. Likewise, the Bank of England will defer any monetary tightening and so hopefully the impact on the real economies will be fairly muted, as it was in 1987. (Q It's a black day basically, for people like yourself?) Yes, I'm sure the financial media will be writing this up as Black Tuesday, but certainly this is an important event for investors and stock markets given the very sharp declines that we have seen globally."
SUPER CAPTION: Neil Mackinnon, Chief Economist, Citibank
The U-S dollar suffered sharp losses against the Swiss franc - a historical safe haven currency - and against the mark. But it held up well against the yen.
Bond markets were buoyant as investors rushed into low risk territory.
Markets in Hong Kong, where a 14-year-old peg to the U-S dollar has been under assault, suffered the worst, falling more than 16 per cent at one stage.
At 0800 G-M-T the Hang Seng index was down 13.6 per cent at 9-thousand-071.54 - 1-thousand-426.66 points lower.
Japan's benchmark index, the Nikkei 225, fell only 4.26 per cent - the smallest decline of major markets.
Many see the Hong Kong dollar peg as especially vulnerable.
Another side-effect was that the U-S Federal Reserve is now highly unlikely to raise interest rates since this could cause even worse turmoil.
U-S Treasury Secretary Robert Rubin said on Monday officials around the world were monitoring the situation but that it was important to remember fundamentals in the U-S remained sound.
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