Financial And Mining Stocks Lead FTSE Plunge

US and European stock markets, including the FTSE 100 (NasdaqGS: Z - news) , have taken a fresh dive with financial and mining stocks leading the way.

The latest plunge in values reflects heightened concerns over the state of the world economy - with US Federal Reserve chair Janet Yellen on Wednesday admitting evidence of greater risks , despite the Fed raising US interest rates in December citing a rosy outlook.

Other central banks - including the European Central Bank and the Bank of Japan - have been cutting rates to try to stoke economic activity.

Sweden's central bank on Thursday became the latest to adopt a negative interest rate, citing weak inflation and an increased threat from the world slowdown.

While the FTSE 100 was up to 2.5% down in early trade, taking it to levels not seen since July 2012, the falls on the continent were sharper - reflecting particular worries for the health of many eurozone banks.

The German DAX, the CAC in Paris and Spanish IBEX were all down more than 3%.

Italy's MIB was 5% lower at one stage as investors fretted over the capital positions of its banks amid continued talk of threats from toxic loans.

Two Greek lenders, Eurobank Ergasias and Alpha Bank (Other OTC: ALBWF - news) , lost 23% and 16% of their value in morning trading.

Deutsche Bank (Other OTC: DBAGF - news) , which has been battling to reassure investors on its financial health this week, was more than 6% down on Thursday while the share price of French lender Societe Generale (Swiss: 519928.SW - news) was off more than 12% following the release of its latest results.

In the US, the S&P 500 was 1.5% lower in early trading.

The biggest losers on the FTSE 100 were financial and mining stocks. They included Rio Tinto (Other OTC: RTPPF - news) which had reported earlier on Thursday an annual loss of almost £600m .

London's top banking shares have not been immune from the 2016 sell-off - with Barclays (LSE: BARC.L - news) and RBS down 6% and 4% respectively in mid-morning trade.

The latest world sell-off has been attributed to Ms Yellen's testimony to a Congressional committee on Wednesday in which she talked of threats emerging this year from the economic slowdown in China and the continued collapse of oil and other commodity prices.

She (Munich: SOQ.MU - news) said: "This uncertainty led to increased volatility in global financial markets and, against the background of persistent weakness abroad, exacerbated concerns about the outlook for global growth."

Market commentator at Panmure Gordon, David Buik, described the tone of her remarks as "a classic recipe to send investors scurrying to the hills".

The start to 2016 has certainly proved a horror show for stocks and therefore pension fund values.

The FTSE is currently more than 8% down on its year opening.