World stocks plummet yet again

LONDON (AFP) - Global share prices tumbled again on Thursday, with a brutal round of losses in Asia and Europe as investors took flight on fears of fallout from the US housing market crisis.

Traders are worried about a global credit squeeze as more banks and investment funds around the world reveal their exposure to the slumping US subprime or high-risk home loan sector, analysts said.

From London to Tokyo, Shanghai to Mumbai and Hong Kong to Sydney, weary traders' screens were awash with red again on Thursday as fears over US housing continued to buffet stock markets.

Across Europe, markets nursed more heavy losses after further dramatic falls in Asia that were sparked by yet another overnight slump in New York.

All eyes remained on Wall Street where credit market anxiety gripped investors again Wednesday as the fear of the unknown prompted a flight to safe haven assets such as government bonds. US markets reopen at 1330 GMT.

"The mood changed again on Wall Street ahead of last night's close, with another sustained run of selling as traders remain somewhat unsure of the extent of the credit squeeze and sub-prime fallout," said CMC Markets trader Adam Neal in London on Thursday.

French President Nicolas Sarkozy, meanwhile, called for the Group of Seven most industrialised nations to take steps to improve transparency in world markets in the wake of the US home loan crisis.

Markets have buckled under a fresh wave of selling as the growing fallout from turmoil in US credit markets prompted investors to flee to safe havens such as bonds.

Australian home loan group RAMS sparked fresh jitters after it failed to roll over five billion US dollars in debt due to worries over the US credit crunch.

In early deals on Thursday, London's FTSE 100 index of leading shares slumped as much as 2.3 percent to 5,968.80 points -- the lowest level since October 5, 2006.

That was the first time the FTSE has fallen beneath 6,000 points since March 5 earlier this year. The index later stood at 5,984.60 points.

In Frankfurt, the DAX 30 index dived 1.91 percent to 7,303.77 points, and the Paris CAC 40 tumbled 2.27 percent to 5,319.15 points.

Markets in Amsterdam, Madrid, Milan and Stockholm all registered steep losses of around 2.0 percent in early trade.

"There has been no let up in the financial market turmoil with equity markets in the US last night and Asia today all lower underlining the fact that fears and uncertainty remain to the fore," said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi.

In a nerve-wracking day for investors, Seoul reeled from its biggest ever one-day plunge in terms of points, ending down 6.93 percent.

And South Korean shares tumbled almost 7.0 percent, posting their biggest ever one-day point decline.

Tokyo's benchmark Nikkei-225 index fell below the key 16,000-point level for the first time since November before clawing back to end down 1.99 percent.

Hong Kong shares tumbled 3.3 percent, the Chinese market dived by 2.14 percent and Singapore shed 3.86 percent.

A fresh 400-billion-yen (3.4 billion dollars) injection of funds into the banking system by the Bank of Japan failed to calm frayed nerves.

New York stocks had fallen sharply on Wednesday on fresh anxiety about the credit market, despite the US Federal Reserve's seven-billion-dollar cash infusion to support the financial system.

The US Dow Jones Industrial Average shed 1.29 percent to end at 12,859.19 points -- the fifth straight closing loss and the first time since late April it closed below 13,000.

Market watchers said that confidence had drained out of the markets, so even though many stocks look cheap there is no obvious trigger on the horizon for a rebound.

Meanwhile, crude oil prices fell heavily as traders fretted that the turmoil on global markets could crimp economic growth and demand for energy.