LONDON - EUROPEAN stocks ended steeply lower on Thursday, with banks leading the decline as global equities slid on investors' fears of a global recession, after Japan's Nikkei tumbled more than 11 per cent overnight amid mounting anxiety that the world economy is plunging into a deep and protracted recession.

The latest bout of selling in the markets was stoked by a record percentage fall on Wall Street Wednesday after weaker-than-expected US retail sales data and a downbeat assessment from the US.

Federal Reserve indicated that the world's largest economy is already, or about to fall, into recession.

'Equity markets are seeing a meltdown again over worries about a global economic slump,' said Neil Mackinnon, chief economist at ECU Group.

The FTSEurofirst 300 index of top European shares unofficially ended down 5.5 per cent at 853.81 points. Across Europe, Britain's FTSE 100 dropped 5.7 per cent, Germany's DAX lost 4.9 per cent and France's CAC shed 5.9 per cent.

Among European banks, HSBC shed 4 per cent, Santander lost 6.5 per cent and BNP Paribas dropped 7 per cent.

Royal Dutch Shell shed more than 7 per cent and Total lost more than 9 per cent as crude oil tumbled 7.5 per cent to below US$70 (S$103) a barrel.

US stocks sank deep in the red on Thursday as traders retrenched again following more bleak economic news, a day after the worst session in over 20 years for Wall Street.

The Dow Jones Industrial Average wobbled in early action and then plunged 304.73 points (3.55 per cent) to 8,273.18 at 1508 GMT (10.08pm Singapore time) after a 733-point drop on Wednesday.

It was the worst one-day point loss for the blue-chip index since last month?s record 777-point decline and the steepest percentage drop since 1987.

The broad Standard & poor's 500 index, coming off a whopping nine per cent plunge, sank another 32.02 points (3.53 percent) to 875.82.

The tech-heavy Nasdaq dropped 45.53 points (2.80 percent) to 1,592.80.

The market action came after Wednesday's panic selloff and further declines in world markets including an 11.4 percent drop in Tokyo.

On Tuesday, the US government followed Europe's lead and announced it is to pump some US$250 billion into shares of its leading banks as part of the US$700 billion package passed by Congress earlier this month.

The US plan was criticised overnight for being insufficient by Japanese Prime Minister Taro Aso. He blamed the renewed drop in markets on an 'insufficient' US bailout plan totaling US$700 billion. 'Since it was insufficient, the market is again falling sharply,' Mr Aso told lawmakers.

The long-term key is whether the flurry of activity by governments can actually break the logjam in credit markets. Despite the coordinated interest rate reductions announced last week, and massive liquidity boosts, the rates at which banks lend remain abnormally high, despite some easing in rates and spreads this week.

The interbank lending rate for three-month dollar loans fell for the fourth day running. It dropped 0.05 per cent to 4.50 per cent, while the three-month Euro Interbank Offered Rate, or Euribor, fell almost 0.08 per centage points to 5.09 per cent.

Though the rates are falling, the differential between the rate at which banks lend to each other and official central bank lending rates remain high, signalling a strong degree of mistrust still exists. In the US the base central bank rate is 1.5 per cent, while in the euro area it stands at 3.75 per cent.

'Libor rates are moving in the right direction but not as fast as central banks would desire but the measures announced this week will take time to take effect,' said Divyang Shah, an analyst at the Commonwealth Bank of Australia.

Though the rescue packages have helped alleviate the pressures on the banking system, they will do nothing to prevent a serious economic slowdown. Fed Chairman Ben Bernanke warned in a speech Wednesday that patching up the credit markets won't provide an instantaneous jolt to the economy.

Concerns about the global economic outlook are clear also in the price of oil, which has fallen another US$1.28 to US$73.26, a new 13-month low.

Commodity stocks are also in retreat after Rio Tinto PLC, one of the world's biggest mining giants, warned of slowing raw material demand from China, the world's biggest growth engine over the last few years. 'The Chinese economy is pausing for breath after spectacular GDP growth,' the company's chief executive Tom Albanese said.

The Swiss government on Thursday became the latest to announce its plans to support its banking system with billions of dollars. The main recipient will be UBS AG, which is being offered up to US$54 billion (S$80 billion) so that it can part with securities that have gone bad since the start of the worldwide financial crisis. Credit Suisse said it had also been offered government assistance but would not make use of it at this time, choosing instead to raise about 10 billion Swiss francs (S$13 billion) on the open market.

Earlier, Tokyo's Nikkei 225 stock average slid 1,089.02 points, or 11.41 per cent, to 8,458.45, its biggest drop since the 1987 stock market crash.

In South Korea, the main index dropped 9.25 per cent after Standard & Poor's said it may downgrade the credit ratings of some of the country's leading banks. The ratings agency warned the credit crisis could make it difficult for the companies to refinance maturing debt.

And Hong Kong's key index trimmed losses, closing down 4.8 per cent after falling more than 8 per cent earlier. Australia's main share index fell 6.7 per cent while India's was down 4 per cent.

The panic selling in Asia hit many sectors. Export-linked shares such as top Japanese automaker Toyota Motor Corp., which was off 9.3 per cent, retreated on worries about declining U.S. demand.

Resource firms slumped along with global commodity prices, with BHP Billiton Ltd., the world's largest mining company, losing 13 per cent. In financials, KB Financial Group Inc., the holding company for top South Korean lender Kookmin Bank, lost almost 15 per cent.

Meanwhile, insurance policies against companies failing to make good on their debt, known as credit default swaps, were more expensive - a signal that firms believe the risk of default is growing.

The US dollar edged up to 101.15 yen, while the euro rose to US$1.3522. -- AP, AFP, THOMSON REUTERS

KUALA LUMPUR
At 5.00 pm today, there were 109 gainers, 584 losers and 177 counters traded unchanged on the Bursa Malaysia.

The KLCI was at 920.02, down 29.86 points, the FBM2BRD was at 4,434.39 down 175.84 points, and the FBMEmas was at 6.085.53 down 201.13 points.

Turnover was at 897.040 million shares.

HONG KONG
Hong Kong share prices closed 4.8 per cent lower on Thursday, matching market tumbles across the world on worries about the state of the global economy, dealers said.

The benchmark Hang Seng Index closed at 767.78 points at 15,230.52.

Turnover was 64.33 billion Hong Kong dollars ($12.2 billion).

SHANGHAI
Chinese share prices closed down 4.25 per cent on Thursday, led lower by securities firms following new profit warnings amid growing fears of a global economic recession, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, was down 84.73 points at 1,909.94 on turnover of 35.1 billion yuan (S$7.56 billion).

The Shanghai A-share index fell 88.78 points, or 4.24 per cent, to 2,006.26 on turnover of 35.0 billion yuan, while the Shenzhen A-share index shed 25.59 points, or 4.64 per cent, to 525.43 on turnover of 16.0 billion yuan.

TOKYO
Japan's key stock index has closed 11.41 per cent lower amid growing recession fears.

The benchmark Nikkei 225 stock average nose-dived a staggering 1,089.02 points to close at 8,458.45 on Thursday.

The massive sell-off comes after the Dow Jones industrial average plunged 7.8 per cent on Wednesday as jittery investors dumped shares on sobering reports on the US economy.

The broader Topix index also dropped 9.52 per cent to finish at 864.52. -- AFP, THOMSON REUTERS, BERNAMA, AP