The price of oil has surged to a fresh high passing the $140 a barrel level.
Light sweet crude for August delivery touched $140.05 on the New York Mercantile Exchange.
The combination of soaring oil prices, rising inflation and fears about the health of the global economy sent stock markets tumbling.
In the US, the Dow Jones industrial average fell 2.29% to 11,539.7 in early evening trade.
Wall Street's tumble soured sentiment in Europe where shares fell to their lowest close since October 2005.
The UK's FTSE 100 closed down 2.6%, or 147.9 points, at 5518.2, the lowest EU Police break up human trafficking ring ...
Nepalese police detain hundreds of anti-China protesters ...
Rubbish Crisis in Naples Worsens ...
Oil above $127 for the first time ...
Merkel Calls on Brazil to Make Biofuel Production Sustainable ...
Citigroup sees second giant loss ... level since March this year.
In Paris, the CAC 40 lost 2.4% to close at 4,426.19 and Germany's DAX index also lost 2.4% ending up at 6,459.60.
Added pressure
The spike in the price of oil followed comments from the producers' organisation Opec about the prospect of oil at $170 a barrel this summer.
Oil producer Libya added to the pressure after signalling it may cut output, while a falling US dollar also pushed up the price of crude.
Analysts said a raft of bad news about the health of corporate America, the impact of higher oil on company profits and fears about US financial sector hurt investor confidence.
"I felt we were going to have a garden variety recession, but if oil goes up goes up to $170 and stays in the $170 area, who knows," said Al Goldman, chief market strategist at Wachovia Securities.
General Motors shares fell to their lowest level in 30 years after analysts gave a gloomy outlook for the auto giant.
Global banking giant Citigroup fell too after a downbeat assessment for the sector, while shares in Belgian bank Fortis fell sharply after it announced a rights issue to shore up its finances.
Gloom spread to the technology sector, where software company Oracle and Blackberry maker Research In Motion painted a pessimistic picture for the future.
(BBC)
<< Back