A barrage of terrorist attacks in the US sent the world's stockmarkets into freefall on Tuesday and raised fears of a global recession.
The New York Stock Exchange was suspended after two passenger jets crashed into the World Trade Center shortly before9am East Coast time. European markets continued to trade, with the FTSE 100 plummeting by almost 6 per cent, the French CAC falling by more than 7 per cent and the German Dax down by more than 10 per cent at 5pm UK time. The FTSE's closing level at 4.746 was its lowest since 1998.
Many of the world's financial giants were based in the World Trade Center or owned offices in the building, including Morgan Stanley, Salomon Brothers, American Express, Commerzbank, Deutsche Bank and insurance giant Aon.
One senior City broker says: "The great and the good were in that building. It is cataclysmic. These companies may have lost all their great people. The financial loss is blasted into insignificance by the cost to human life."
Oil prices soared on Tuesday afternoon. Panic in the world's stockmarkets is expected to continue over the coming weeks although it is not yet certain when Wall Street will reopen.
Commenting on Tuesday afternoon before markets closed, one London broker said: "People are just selling anything. People are panicking. If a war breaks out, you do not want to be long on anything."
Edinburgh Fund Managers deputy chief investment officer Iain Beattie says the longer-term effects on markets will depend on reactions to the crisis. He says: "It depends on reactions to the crisis. He says: "It depends completely on the response and how the American people react. I do not think they will take this sitting down. Trade will grind to a halt and the economy will slow down. This is a shocking thing to happen."
Analysts believe the crisis will prompts a further 0.5 per cent cut in US interest rates on October 2 in a bid to prevent a full-scale recession.
Hargreaves Lansdown head of research Mark Dampier says: "The impact of this will be sectorised but it is a big hit on a depressed market. However, you only have to look at what happened a few months after the index hit its lowest-ever level because of Dunkirk to see how quickly it can recover."