KEY POINTS:
Europe's sharemarkets were in a tailspin early today, mirroring an earlier plunge in Asia.
Official figures suggesting Britain is entering a prolonged recession and a torrent of woeful company results rattled jumpy investors.
Britain's FTSE 100 index fell 7.5 per cent in the first four hours of trading, the German Dax was down 9.15 per cent and France's Cac 40 had dropped 8.24 per cent.
In Asia, Japan's Nikkei slid 9.6 per cent, the Korea composite stock price index plummeted 10.6 and Hong Kong's market closed 8.3 per cent down because of fears over a deteriorating world economy.
Both of Russia's stock exchanges suspended trading in the early afternoon after sharp falls accelerated because of fears that plunging oil prices would hurt the economy.
In London, the markets' decline shocked analysts.
"One hasn't been expecting this," said Edward Menashy, an economist at Charles Stanley. "The fall in the Japanese market is incredible."
Official figures yesterday showed that the British economy shrank 0.5 per cent between July and September.
It was the first drop in 16 years. Although expected, it was bigger than forecast.
The figures will boost expectations that the Bank of England will cut interest rates by another 50 points next month, as the UK economy looks to be heading into its first recession since the early 1990s.
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