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Nikkei Plunges 5% But FTSE Opens Higher

Japan's Nikkei has closed 4.8% lower as it reacted to sharp sell-offs in European and US markets which saw London's FTSE 100 (NasdaqGS: Z - news) fall to its lowest level in four years on Thursday.

Among the biggest fallers in Japan was Softbank which owns over a third of Alibaba, the Chinese retail giant which is valued at more than £100bn.

The Nikkei has now fallen for seven of the past eight sessions, having been closed on Thursday for a public holiday.

Despite the falls in Asia, the FTSE 100 staged a small recovery this morning rising by over 1% in early trading, but that will be little consolation for investors who have suffered the worst start to a year.

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The index of the UK's 100 largest listed companies has shed nearly 11% of its value so far this year, equivalent to a financial loss of over £170bn.

Global markets have taken a fresh dive amid 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.

Only eight FTSE 100 stocks are in positive territory this year, while 10 have lost more than a quarter of their value and we are not even seven weeks into the new year.

Among the biggest losers are the banks with Barclays (LSE: BARC.L - news) 32% lower and RBS (LSE: RBS.L - news) down 26%.

Meanwhile, gold enjoyed its best daily gain since 2011 yesterday as investors fled from risky stocks to pile into the safe-haven commodity - driving strong gains for UK-listed gold miners Randgold and Fresnillo (Other OTC: FNLPF - news) . The precious metal's price has risen 17% so far this year.

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

What scares investors is that despite this action from the central banks the markets have continued to slide and that further tools or weapons with which to address these fears have been fully exhausted, while many argue that negative interest rates hurt banks' profitability.

Markets are also mindful of the impact of oil. Although the Bank of England says that lower prices are good for the UK economy as a whole the firms that fund our pensions are often heavily exposed to the value of 'black gold' which has fallen nearly 44% over the last year.