Shares dive on economic worries

Concerns about the state of world economies have sent global stock markets falling sharply.

The drops came despite a dramatic interest rate cut from the Bank of England and a smaller reduction from the European Central Bank.

In New York the Dow Jones plummeted 443.2 points, or 4.9%, nearly matching Wednesday's 486 point slide.

In Europe, London's FTSE 100 closed down 5.7%, Frankfurt's Dax dropped 6.8% and the Cac 40 in Paris fell 6.4%.

Interest rates were cut in an attempt to boost consumer spending and business activity to try to avoid a prolonged slowdown.

"Extraordinary times require extraordinary actions," said Stuart Porteous, head of RBS Group Economics, commenting on the Bank of England's decision to cut rates by an "unprecedented" 1.5 percentage points to 3%.

Meanwhile, the European Central Bank cut its key rate by half a percentage point to 3.25%.

Earlier in Asia, Japan's Nikkei index had closed down 6.5% while Hong Kong's Hang Seng dropped 7.1%.

'Back to reality'

A raft of economic data released this week has underlined the case for rate cuts.

Figures released on Wednesday showed retail sales fell in the eurozone during September, while US figures indicated that the service sector had suffered a sharper-than-expected drop in activity during October.

On Thursday, both Toyota and Isuzu Motors slashed annual profit forecasts, providing a further reminder of the weakness of the global economy.

"We had a week of rebound and then we're coming back to reality" said Francis Lun, general manager of Fulbright securities in Hong Kong.

"Despite the world euphoria over the election, the world's economy hasn't changed," he added.

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