Markets: Flight To Safety As Nikkei Falls 5.3%

The global stock market rout has intensified, with Japan's Nikkei losing 5.4% of its value amid a rush for safe havens such as gold and the yen.

While trading across Asia was largely muted because of continuing Chinese New Year holiday celebrations, the Nikkei followed European and US stock markets down on Tuesday after they endured further losses on Monday.

Banking stocks have been particularly hit - amid fears of recent history repeating itself and loans, particularly to the commodity sector, turning sour as the world economy stutters.

The rush for the exit in Japan saw investors pile in to gold and the yen - strengthening its value versus the US dollar. That scenario intensified the pressure on share values in exporters and drove them down further.

Japanese government bond yields even turned negative, for the first time in a G7 economy's history, as demand for safe harbour grew.

The market turmoil of 2016 worldwide has been partly attributed by some market analysts to the end of the US Federal Reserve's quantitative easing programme and its decision to raise interest rates - arguing a correction in values was perhaps overdue.

But while the Fed saw a sufficient recovery in the US economy, the rest of the world is more exposed to the slowdown in emerging markets and subsequent commodity price collapse - aided by the record glut in oil.

The Bank of Japan introduced a negative interest rate for commercial banks to park money with it only 10 days ago, in a bid to get them lending and stoke stubbornly low inflation.

The European Central Bank has also adopted such a policy while there is no prospect of the Bank of England raising Bank rate this year.

The FTSE 100, which lost 2.7% or £41bn from its market value on Monday, is almost 9% down this year so far.

Financial spreadbetters expected it to lose further ground early on Tuesday, falling by up to 0.5% on opening.

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