Stock markets on both sides of the Atlantic ended a week of vicious losses with yet more steep falls in share prices yesterday, as rattled investors remained gripped by fears over the outlook for America’s economy and corporate earnings, and the toll from the global credit squeeze.

Wall Street was hit by an aggressive sell-off in equity markets for a third day in a row. More steep losses for shares were fuelled by worries over deteriorating profits in the technology sector, leaving the tech-laden Nasdaq nursing its biggest weekly loss in points terms since the September 11, 2001 terrorist strikes against the US.

The Dow Jones industrial average slumped yesterday by another 223 points, or 1.7 per cent, after shedding a hefty 578 points in the previous two trading sessions, taking the US blue-chip benchmark close to falling below the 13,000 mark. It closed last night at 13,042.70. The broader-based S&P 500 index also fell by 1.4 per cent, while the tech-laden Nasdaq dropped by more than 2.5 per cent on the day.

London shares were not spared from the latest battering for equity investors, with rumours of a big writedown at Barclays helping to send the FTSE 100 index down 77 points, to close at 6,304.9 despite the bank’s insistence that the story had no substance.

In the US, Wall Street’s latest slide was given added momentum by another dose of bad economic news when a key survey of US consumer confidence showed that sentiment tumbled at the start of this month to the lowest ebb since Hurricane Katrina struck America’s Gulf coast in 2005. The University of Michigan’s headline gauge of US consumers’ confidence slumped to a preliminary November reading of 75.0, from 80.9 last month.

The data added to anxieties that the impact of the credit squeeze in tightening lending conditions for US households will combine with the still-deepening slump in America’s housing market and a surge in energy bills triggered by soaring oil prices, to undercut consumer spending — the key motor for US economic expansion.

The dollar also remained under intense pressure on foreign exchanges as currency markets took only scant comfort from news that the vast US trade deficit dropped in September to its lowest for 28 months at $56.5 billion, down from $56.8 billion in the previous month. New losses for the dollar drove the euro to a record high of $1.4752.

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