Shares had their worst day in a year on Thursday. There was a massive sell off worldwide with investors gripped by fear about a global economic slowdown and the euro zone’s spreading debt problems.
So far this week more than 400 billion euros has been wiped off the value of the top shares on the German, British, French, Italian, Spanish and Dutch stock market indexes.
That is almost the size of the 440 billion euros capacity of the rescue fund set up by the European Union.
Investors piled more money into safe-haven assets like government bonds. Gold is also enormously popular. It hit fresh records heading up towards 1,700 dollars an ounce. The euro fell one percent against the dollar.
Officials moved to calm markets and ease volatility around the world, with the largest move coming from Tokyo, where the government spent an estimated 1 trillion yen (9.2 billion euros ) to stem the strength of its currency.
The intervention came a day after an unexpected cut in interest rates by Switzerland to weaken the franc.
Safe-haven assets like the Swiss franc, the yen and gold have spiked this week as investors fret that governments around the world are planning spending cuts at a time of slowing global economic growth.