Turmoil on stock markets persists

The past few days have seen a dramatic sell off in shares around the world, with stock markets seeing falls of the magnitude not seen since the global financial crisis of 2007-08.

Once again, there are worries that the eurozone debt crisis could spread from the bloc's smaller countries, to larger economies such as Spain and Italy.
Investors are also worried that growth in the US economy is slowing, which would have a knock-on impact on the rest of the global economy.

The world's main stock markets have seen big falls in the past few days, as investors shun shares and look for safer investments.
The falls have wiped out any gains that many of the markets had made this year, with fears growing that we could be heading for another credit crunch.
London's FTSE 100 index has fallen more than 7% this week, the US Dow Jones index has dropped more than 6%, while Japan's Nikkei index is 5% lower.
Shares in European banks have come under particular pressure as investors are worried about what level of eurozone government debt they are holding, and whether this will be repaid if the eurozone debt crisis spreads.
Crisis spreading One of the main causes of nervousness on the markets has been whether the eurozone debt crisis will spread.
So far Greece, Portugal and the Irish Republic have already received bailouts.
Last month, eurozone leaders agreed a second bailout deal for Greece, and also agreed more powers for the European Financial Stability Fund.
This was supposed to have reassured markets that the debt crisis would not spread beyond the "periphery" countries to larger economies such as Spain and Italy.
However, any relief was short-lived, and yields - which indicate the cost of borrowing for a country - on Spanish and Italian debt have continued to rise.

Analysts are worried that yields are reaching the point where it would become prohibitively expensive for these countries to borrow on the financial markets and force them to ask for international help, too.
Meanwhile the yield on German debt - seen as the safest in the eurozone - has fallen.
Growth fears Another factor which is unnerving the markets is that the US economy - the world's largest - is growing much more slowly than had been hoped.
A few days ago the big worry was that the US government might default on its debts, with Republicans and Democrats deadlocked over how to raise the US debt limit.
However, when an agreement was finally reached, investors returned their focus to the strength of the economy.

Last month, figures show the economy grew at an annualised rate of 1.3% in the second quarter of the year, which was slower than expected.
In addition, the growth rate for the first quarter was revised down sharply from 1.9% to 0.4%.
Recent days have brought more gloomy news. Figures showed that US consumer spending fell 0.2% in June, the first drop in almost two years.

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