LONDON - Global stock markets sank Wednesday and the dollar soared as investors fretted over recession fears and heightened Ukraine tensions.
"With the prospect of a sharp economic slowdown, further pain for households and businesses, and investor sentiment on its knees, alas equities markets continue their descent," said AJ Bell investment director Russ Mould.
The haven dollar held at multi-year highs against rival currencies, with the euro plumbing a new 20-year low at $0.9536.
The British pound slumped 1.7 percent against the greenback -- despite the Bank of England snapping up UK government bonds to try and bring calm to markets.
However, the UK government's 30-year bond yield managed to retreat to 4.44 percent, having hit a 1998 peak at 5.14 percent.
The BoE intervention followed criticism Tuesday from the International Monetary Fund, which argued that Britain's recent budget could increase inequality and worsen inflation.
New finance minister Kwasi Kwarteng's tax-cutting plan last week sent shockwaves through markets, pushing the pound to a record low and leading to dire warnings for Britain's economy.
The dollar remains the go-to unit as the US Federal Reserve leads the way in raising interest rates.
Observers are betting that US borrowing costs will peak at around 4.75 percent next year, and are expected to remain elevated for some time.
The prospect of such tight monetary policy has battered equities, as US 10-year Treasury yields -- a gauge of future rates -- hit four percent for the first time since 2010.
Sentiment was also rattled by worries about developments in Ukraine, after Kremlin-installed authorities in four regions under Russian control claimed victory in annexation votes, with Moscow warning it could use nuclear weapons to defend the territories.
Ukraine and its allies have denounced the so-called referendums as a sham, saying the West would never recognise the results.
- Key figures at around 1145 GMT -
London - FTSE 100: DOWN 0.8 percent at 6,927.75 points
Frankfurt - DAX: DOWN 1.5 percent at 11,961.92
Paris - CAC 40: DOWN 1.4 percent at 5,675.32
EURO STOXX 50: DOWN 1.5 percent at 3,279.53
Tokyo - Nikkei 225: DOWN 1.5 percent at 26,173.98 (close)
Hong Kong - Hang Seng Index: DOWN 3.4 percent at 17,250.88 (close)
Shanghai - Composite: DOWN 1.6 percent at 3,045.07 (close)
New York - Dow: DOWN 0.4 percent at 29,134.99 (close)
Pound/dollar: DOWN at $1.0569 from $1.0730 on Tuesday
Euro/dollar: DOWN at $0.9556 from $0.9595
Euro/pound: UP at 90.41 pence from 89.39 pence
Dollar/yen: DOWN at 144.76 yen from 144.81 yen
Brent North Sea crude: UP 0.1 percent at $86.36 per barrel
West Texas Intermediate: UP 0.5 percent at $78.86 per barrel