World stocks extend slide despite assurances

World stocks fell in volatile trade Monday and gold hit record highs despite G7 and G20 pledges to bolster the global economy and European Central Bank action on eurozone debt, which analysts said lacked punch.European stock markets opened sharply lower then enjoyed strong gains before heading back into the red in midday trade while Asian equities closed lower after big losses. Concerns about weakening growth saw 'safe haven' investment gold shoot to record highs above $1,700 an ounce. The euro was down against the dollar after initial gains, while oil slumped."It looks like we are in for another volatile week," said Dermot O'Leary, economist at Goodbody Stockbrokers in Dublin."Leaders have come out with strong statements that they will do what is needed but markets will be looking for real action."London's benchmark FTSE 100 index was down 1.83 percent by midday, Frankfurt plunged 2.66 percent and Paris gave up 2.35 percent.The British market dived almost 10 percent last week on fears of another vicious global downturn, wiping around £150 billion from the combined value of the FTSE's 100-listed companies, which include giants HSBC, Shell and Vodafone."Turbulence remains likely until such time as there are some concrete debt proposals from the US and the eurozone, where potential contagion remains an issue," said analyst Richard Hunter at Hargreaves Lansdown Stockbrokers.As nervous global markets re-opened, financial chiefs and central bankers of the G7 nations, which include Germany and the United States, pledged to "take all necessary measures to support financial stability and growth."The G20 of top industrialised and emerging economies made a similar pledge. Barclays Capital analysts downplayed the statement, saying it "sought to bolster confidence but offered only consoling words."Asian stocks tumbled on Monday as traders focused on last week's historic downgrade of the United States' credit rating, which compounded concerns over the world's biggest economy as well as the global outlook.Tokyo closed down 2.18 percent, Hong Kong tumbled 2.11 percent, Seoul sank 3.82 percent and Sydney shed 2.91 percent."No one really fully understands the full implications of this credit downgrade, which is why we have seen the market sold off hard," said Ben Potter, analyst at trading group IG Markets. "It's a classic case of sell first, ask questions later."The stock market falls were echoed by big losses in oil futures while gold hit a record $1,715.75 an ounce as investors moved out of risky assets.On Friday, the United States had its top-notch AAA credit rating downgraded for the first time, when Standard & Poor's cut it to AA+ with a negative outlook on concerns over the country's debt.The decision sparked criticism from Washington, with Treasury Secretary Timothy Geithner saying the agency had shown "terrible judgement" and assuring investors US Treasuries were as safe as ever.In foreign exchange deals, the euro fell to $1.4266 from $1.4282 on Friday. With concern running high that eurozone debt could plunge the world into a new financial crisis, the European Central Bank promised to make major purchases of eurozone government bonds.The ECB said it would resume bond purchases after Italy and Spain had announced new measures to control their finances and boost their economies, and France and Germany pushed for full and rapid implementation of a plan to avoid future crises. Madrid stock prices were flat after jumping more than 3.0 percent early Monday while Milan fell 0.48 percent after initially rocketing 4.0 percent. The pressure on Italian and Spanish government debt meanwhile eased sharply in early trade.The yield or the rate of return earned by investors on the Italian 10-year government bond was 5.417 percent, down from 6.189 percent at the close Friday.The Spanish 10-year bond was at 5.285 percent after 6.271 percent.Rates above six percent are thought to be unsustainable over the longer term for government financing and the pressure on Italy and Spain had raised fears that they too may need a bailout after Greece, Ireland and Portugal.