Worries about world corporate health combined with deepening fears over a war in Iraq helped sink European shares and lift safe haven government bonds today.
The dollar was generally steady, and gold rose as investors again sought security against a Gulf conflict. Oil prices were steady.
War fears continued, with US President George W. Bush saying yesterday that diplomatic efforts to end the showdown over Iraq's suspected possession of weapons of mass destruction would last "weeks, not months".
A sharp sell-off on Wall Street that took US stocks to three-month lows also undermined sentiment on European bourses, which were also affected by fears that insurers will need to sell shares to bolster solvency.
The FTSE Eurotop 300 index of pan-European blue chips was about 1.6 per cent lower, heading back towards six-year lows after a brief respite from the selling over the past few sessions.
On Wall Street yesterday, stocks sank to their lowest levels in more than three months as a huge loss at AOL Time Warner and a weak outlook dampened sentiment in a market grappling with war and economy fears.
Earlier today in Japan, technology and telecom stocks fell, but the tech-sensitive Nikkei average staged a last-minute rally to close 0.28 per cent higher at 8,339.94.