Growing panic over an imminent global recession sent Asian stocks plummeting today and pushed the price of oil down to a 16-month low amid signs that demand for crude is falling.

Japan's Nikkei index plunged by 7 per cent in early trading, after shares on Wall Street last night closed down 514.45 points, but regained some ground in the afternoon to end the day down 2.5 per cent at 8,460.98.

As well as the onset of a recession in the world's leading economies, investors have been spooked by poor results from their largest companies, which was chiefly responsible for the steep 5.6 per cent on America's Dow Jones industrial index.

This morning, Sony, the Japanese electronics giant, issued a profits warning and cut its expectations for the year by 57 per cent after its export business was hit by the stronger yen and falling demand for its products.

Stock markets across Hong Kong, South Korea and Australia also registered heavy losses. Yesterday, the White House called an emergency summit of the world's key economies for November 15.

World leaders and finance ministers from the G20 — the Group of Seven leading Western economies and the most important emerging market nations, including China and Russia — will gather in Washington, 11 days after the US presidential election, to debate further worldwide action to tackle the worst effects of the still increasing crisis.

Fears of falling demand also sent oil prices down overnight.

Brent crude tumbled by more than $5 to $64.70 a barrel while the price of oil in the US fell by $5.52 to $66.66, the lowest price since June last year and 55 per cent below the $147 peak reached in July this year.

Opec, the cartel responsible for 40 per cent of the world's oil production, is due to meet tomorrow to decide whether to cut supply in an effort to keep prices buoyant.

However, if prices continue to fall, it could boost UK consumers' budgets since Britain's leading supermarkets this week introduced further cuts to a litre of unleaded petrol as Gordon Brown ordered retailers to pass on falling costs to customers.

Yesterday, the Prime Minister said that recession in the UK was now likely, echoing remarks made by Mervyn King, Governor of the Bank of England, whose stark warning on the state of the UK economy sent the pound tumbling to a five-year low.

This morning, sterling fell again against the dollar to $1.6295 from yesterday's close of $1.6334, while shaken investors continued to pile into the relative safety of the greenback.

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