LONDON, Dec 1: US and European stocks plunged on Monday as weak economic data pointed to a looming global recession, dashing hopes of a quick recovery in equity prices after the gains of last week.

Shares in London, Paris and Frankfurt all closed more than 5.0 per cent lower, while the Dow Jones on Wall Street was down by around 4.50 per cent at midday.

“Economic growth figures have outlined the worst global recession since at least the 1980s while gauges of inflation expectation point to growing deflation fears across the G7,” said Lena Komileva, an analyst at brokerage Tullett Prebon in London, referring to the Group of Seven rich countries.

A deluge of economic data and company reports on Monday suggested economic growth was slowing in powerhouse emerging markets China and India and reinforced expectations of a deep recession in advanced economies.

In Europe, London’s FTSE 100 index closed down 5.19 per cent, the Paris CAC 40 shed 5.59 per cent while Frankfurt’s DAX lost 5.88 per cent.

Italy’s SP/Mib index finished down 6.25 per cent and Spain’s Ibex-35 was off 4.49 per cent.

On Wall Street, the Dow Jones Industrial Average slid 4.65 per cent to 8,418.85 at 1605 GMT after five winning sessions.

The Nasdaq shed 5.45 per cent to 1,451.89 and the broad-market Standard & Poor’s 500 index lost 5.49 per cent to 847.04.

Global stock markets had soared last week as governments rolled out measures to stimulate the global economy and fight against the credit problems in the financial sector.

But like many times since the start of the financial crisis in mid-2007, a euphoric rally has been followed by a brutal correction.

The Dow Jones Industrial Average surged 9.73 per cent last week, London gained 13.41 per cent and Paris had its best week ever, gaining 13.24 per cent.

“It is the first day of December and many market participants are hoping for a Santa Rally into the end of the year,” said City Index analyst Tom Hougaard earlier on Monday.

There was no sign of good news on Monday to justify the festive optimism.

The positive news ahead is likely to come from central banks across the world which are poised to take further action against the gathering gloom.

Interest rate cuts are expected later in the week in Britain, the eurozone, Australia and New Zealand.—AFP