Global markets tumble over US economy fears

The FTSE 100 Index was down more than 130 points at 4,938 in early trading, a fall of nearly 3 per cent. Get the latest markets information here.

Overnight, there were huge losses in Asia triggered by a Wall Street slump which saw the Dow Jones Industrial Average shed 5.6 per cent of its value, its biggest drop since the height of the credit crunch in 2008.

Japan’s Nikkei index fell 2.8 per cent, the Hang Seng in Hong Kong dropped 6 per cent and South Korea’s Kospi index lost 5.3 per cent.

The uncertainty continued despite attempts by President Barack Obama to calm the market while he was at a Democratic fundraiser.

The President admitted there was a “serious problem” with debt and deficit, but said much of it he had inherited.

He added: “As President of the United States my job is to work with Congress to try to get as much done as possible. Whether we’re going to see any progress out of this Congress right now – because so far we haven’t seen much when it comes to innovative ideas that actually put people to work and grow the economy – remains to be seen.”

Investors are worried about the strength of the US economy, particularly after its AAA credit rating was downgraded on Friday. Concerns over the eurozone also continue, and all eyes are now trained on European markets, which suffered heavy losses on Monday.