Following Black Thursday’s falls of up to six percent, there was another sharp sell-off on European stock markets on Friday as shares in some banks flirted with two year lows.
Germany’s DAX and Madrid’s IBEX were both down two percent, while Milan ended the day 2.5 percent lower.
Investors were increasingly worried about the prospect of a new global recession, with the US economy seen as particularly vulnerable.
On this side of the Atlantic, analysts were worried the euro zone crisis was spreading through the financial sector.
Banks under pressure included the UK’s Lloyds, Belgium’s KBC, Germany’s Deutsche Bank and Spain’s Santander. Some European lenders were forced to pay more to access short-term funding.
The FTSEurofirst 300 index of the region’s top shares closed down 1.7 percent. It is now down 16 percent this month — on track for its biggest monthly drop since being launched in 1999 — and 19 percent this year.
Gold jumped to a new record of $1,877 an ounce, heading closer to the $2,000 target predicted by some analysts.