Markets slide on inflation fears

Inflation worries are unnerving markets across the world

Inflation worries, near-record oil prices and fears of further bank losses have led to a sell-off of shares across global stock markets.

Key share indexes in India and China both fell 3% while Japan's main index fell for its ninth consecutive day for the first time in four years.

In Europe, the FTSE 100 fell 2.6% while the Cac40 fell 2.1% and the Dax 1.6%.

But in New York the Dow Jones Industrial Average bucked the trend, ending the day up 0.28%.

Bank rumours

Swiss bank UBS, which has been one of the biggest victims of the widespread financial crisis caused by the US housing slump, reshuffled its management on Tuesday.

This sparked speculation that the firm, which has announced plans to cut more than 5,000 jobs, could be set to announce further losses from failed mortgage-backed investments.

It has already incurred losses of more than $37bn.

We haven't hit the bottom yet... investors are still pessimistic at this point Zhang Xiuqi, Guotai Junan Securities Follow key share indices

"There is more concern coming back in on the banking sector again," said Andrea Williams, head of European equities at Royal London Asset Management.

"There are a lot of rumours about writedowns."

Earlier, Asian stock markets were hit by concerns that rising inflation, stoked by higher prices for oil and raw materials, would eat into company profits and slow economic growth.

In India, where inflation is at a 13-year high, the main Sensex index in Bombay slid 3.7% to 12,961.68. Shanghai's main index. meanwhile, fell 3.1% to 2,651.6, a 16-month low.

"We haven't hit the bottom yet," warned Zhang Xiuqi, from Guotai Junan Securities.

"That is because investors are still pessimistic at this point."

Losses in Japan were limited despite the closely-watched Tankan survey of corporate prospects showing that business confidence had fallen to a five-year low.