By Ian Dunt Follow @IanDunt
Stock markets in London slumped spectacularly today amid fears over US economic performance and the ongoing Eurozone crisis.
London's FTSE 100 Index fell 3.4% , its worst level since November, when markets responded to the Ireland bailout.
The slump wiped £50 billion of London's blue chip share index.
The fall was replicated across the world, with the Dow Jones falling by 0.8%, the German Dax dropping two per cent and the French CAC 40 index slumping by a similar amount.
Wall Street fell more than ten per cent off its recent high.
The slump suggests that the market is extremely pessimistic about the deal stitched together in Washington earlier this week, which left most commentators on the political left and right unsatisfied.
With Spanish and Italian borrowing costs rising sharply due to fears over their ability to maintain debt repayments, many observers started openly worrying that the world economy could be about to replay the crash of 2008.
Gold hit record highs today due to its image as a safe haven, with record price highs of $1,674 an ounce.
Sterling strengthened against the dollar amid signs it was adopting the traditional role fulfilled by the American currency as a safe bet during unpredictable times.
George Osborne is likely to take that reaction as proof that the markets are treating Britain as one of the few major western economies that can be trusted in the current climate.