The Dow Jones Industrial Average tumbled in New York, wiping out early gains as panic selling continued into another session.

The fall came despite the release of US government figures that showed the economy was growing at a faster rate than anticipated.

Second quarter GDP rose by 3.4 per cent, above the forecast 3.2 per cent growth, sending the Dow up 23.60 points to 13,497.20 and strengthening the dollar, which has sustained damage from the collapse of the sub-prime mortgage market.

The Dow was trading down 89.3 points at 13,384.6 by 6.45pm UK time.

The US data delivered a temporary improvement in Britain's leading shares, only for gains to be reversed by the close.

The FTSE 100 index closed down 36.0 points at 6,215.2, having traded above 6,700 two weeks ago. During the day it had been oscillating between 64 points above and 59 points below Thursday's close.

Panicked investors yesterday fled stock markets amid anxieties that the flood of cheap credit that has fuelled a global boom in corporate deals is drying up. There are also fears over the state of the US mortgage market.

Today, big miners were weaker, with Anglo American down 114p at £27.39, Rio Tinto off 91p at £33.38, and Antofagasta 25p lower at 674p.

Housing stocks showed gains, with Persimmon trading up 21p to £10.99. Barratt Developments was 14.5p higher at 904.5p, while Land Securities put on 9p to £16.28.

Resolution gained 18p to 649.5p after it emerged last night that Pearl Assurance had increased its stake in the closed funds insurer and would look to hold talks about a merger. Pearl today topped up its stake to 15.85 per cent. Resolution has already agreed a deal to merge with Friends Provident.

Overnight in Asia, Japan's Nikkei 225 index lost 418.28 points, or 2.36 per cent of its value, to close at 17,283.81 and Hong Kong, the Hang Seng was down 493.47, or 2.1 per cent, at 22,718.22.

Markets in China, Australia, Taiwan, Singapore, Malaysia and Thailand also fell.

"You've got an economic impact from lower housing prices and housing demand," Simon Doyle, a strategist at Schroder Investment Management Australia, told Bloomberg. The firm manages the equivalent of $11.4 billion. "If the US is under question, there might be a broader contagion," he said.

In Tokyo, worries about corporate health were exacerbated as NTT DoCoMo, Japan’s largest mobile phone operator, posted a 25 per cent fall in quarterly operating profits fuelled by a price war with its rivals KDDI and Softbank.

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