Concerns about the US economy sparked investor caution today.
Soft US housing data yesterday affected the shares of US banks, brokers and mortgage lenders on Wall Street overnight and dented stocks in industrial conglomerates dependent on economic growth.
It played to global investor fears that a slumping US housing market will both undermine growth and, through failed mortgages, threaten financial stability among lenders and the overall ability to borrow.
MSCI's main world stock index is down around 7 per cent from its all-time high hit in July 20th, but it has recovered about the same since hitting a low on August 16th.
European share prices took large losses, led by banks, following a newspaper report on exposure by British bank Barclays to failed debt vehicles.
The investment banking arm of Barclays denied the Financial Timesreport that it had been left with several hundred million dollars of exposure.
The euro also remained on the back foot after European Central Bank President Jean-Claude Trichet's said yesterday that his comments on policy on August 2nd were made before the market turbulence, raising further doubts about a previously expected interest rate rise at next week's ECB meeting.