Last week's rally is now a distant memory, as American stock markets emulate Europe and the UK in starting the week with heavy losses.
Greek concerns are the primary driver, although China has also given financial spread betting investors something to worry about, with former central bank officials warning of a slowdown in the world's second-largest economy.
By 3.30pm (London time), the Dow Jones had fallen 1.9% to 11287.56, a loss of over 200 points, while the S&P 500 had shed 2% to 1191.92 and the Nasdaq 100 index of leading technology stocks had fallen 1.6% to 2269.95. In London, the FTSE 100 continued to fall, and was down 2.2% to 5249.88.
US indices down
US markets have followed their European cousins in opening heavily down today, putting last week's risk rally firmly behind them.
Like Europe and the UK, the selling is being driven primarily by eurozone worries, as a conference call between Greece and its overseers in the troika nears.
Finance minister Mr Venizelos will speak with IMF, ECB and Eurogroup officials at 5pm (London time), but with a number of influential people calling for Greece to default, the conversation could be an interesting one.
Banks & miners drag FTSE 100 down
The UK banking sector may have rallied for much of last week, but the sector was under renewed pressure today as Greek woes took centre stage. Just as last week the banks led the rally, today they led the wider market back down again. With a Greek default looking increasingly like a certainty, investors are becoming worried again about the impact on financial firms.
A default and exit from the eurozone for Greece could prompt other countries to do the same, which would mean that eurozone banks would suffer serious losses. Lloyds suffered the most, falling 6.9% to 33.3p, while RBS and Barclays followed along with declines of 6.5%.
Along with the banks, mining shares have slumped on global growth worries. The heaviest faller, Antofagasta, engaged in a competition with Lloyds to see who could drop the most. The race was fairly close, but the copper miner managed to outpace the bank with a 7% fall to 1209p.
Such heavy losses were commonplace across the sector, with Kazakhmys, Vedanta and Xstrata all losing 6% or more. Once again though, gold stocks were higher, with Randgold gaining 2% to push it above £70 per share, and African Barrick Gold rising 1.1% to 598.5p.
China slowdown fears increase
When the global economy slumped in late 2008, a bright spot always remained in the shape of China. This rapidly-growing economy helped sustain the flagging west through the crisis with massive investment in infrastructure and house building. Yet, as we edge ever closer to a crisis once more, China seems to be entering a period of slow growth.
Wu Xiaoling, a former deputy governor of the Chinese central bank, has said that the economy would slow next year, as a result of inflation and the burden of higher government debt.
Without this crutch of support, the west will find it much more difficult this time round to kick-start economic growth. Nonetheless, China's economy has grown at an annual rate of around 9% for many years, a rate of growth that makes Western officials green with envy, so any slowdown should be seen in the context of the previous rate.
Commodities down across the board
The China worries and a surging US dollar have had a deleterious effect on commodities.
With the US dollar index up more than 1%, oil, silver, copper and soft commodities are all in retreat. Even gold, which was supported this morning by safe-haven demand and news of central bank buying, has dropped back, edging closer towards $1800 per ounce.
Fears about slowing growth in China meant that copper, long a proxy for the health of the global economy, has been pushed lower, since China accounts for 40% of total demand for the red metal.
Oil, another helpful bellwether for the global economy, is also dropping back, with US crude futures down 3% to around $85 per barrel.
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'Financial Spread Betting Markets Fall on Chinese Growth Concerns', Article by IG Index, last update: 19-Sep-11
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