Global stocks plunged on Thursday, led by US benchmark index Dow Jones Industrial Average which fell over 480 points after an investment banking major said America and Europe could be heading towards recession, amid weak economic data from across the world.
In line with Asia markets, European and American stocks slumped with most of the key indices shedding as much as four per cent. The rout is likely to reverberate on Friday in Indian equity market which plunged over 371 points on Thursday.
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According to reports, Morgan Stanley warned that the US and Europe are dangerously close to recession amid a rise in jobless claims in America, igniting fresh fears of turmoil in the world economy.
Recession refers to negative economic growth for two straight quarters.
Moreover, fears about the liquidity of European banks and disappointment over moves to tackle the spiralling debt turmoil, sent stocks in the region into a tailspin.
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Meanwhile, Japan exports showed a sharp dip while retail sales in the UK slumped for July.
After plunging nearly 500 points, Dow Jones recovered marginally and managed to cross the 11,000-mark in afternoon trade. The index was trading at 11,000.90 points, down four per cent or 409.30 points.
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The broader S&P 500 plummeted over four per cent to 1,144.75 points while the tech-heavy Nasdaq Composite slid similarly to 2,401.92 points.
London Stock Exchange's FTSE 100 crashed nearly 240 points or over four per cent to close at 5,092.23 points while Germany's Dax plunged nearly six per cent to 5,602.80 points.
France's key index Cac 40 fell over five per cent to end the day at 3,076.04 points.
Earlier in the day, most of the Asian markets closed in the red. Chinese benchmark Shanghai Composite Index and Japan's key Nikkei 225 shed over one per cent.
The persisting global economic uncertainty and recent S&P downgrade of US debts has ravaged stock markets worldwide, shaving off trillions of dollars worth investor wealth.