Stock markets across Europe and the US had their worst day in several months. In London the main share index fell more than 200 points - the biggest one day points drop in over four years.

Everywhere the gloom was partly a response to new figures underlying the slump in the US housing market. Poor company profits data and a jump in oil prices also played a part. But, perhaps most important, the markets are gripped by worry that banks and investors generally are becoming much less willing to take on risk.



For some time financial institutions have been reeling from an expected 100 billion dollars of losses from low income Americans defaulting on loans to buy their homes. Now there's concern about the corporate debt market - on Wednesday it emerged that banks were unable to find other investors willing to share the risk in a high profile corporate takeover, the 12 billion dollar buy-out of the US car giant Chrysler.



Other planned takeovers could also be in trouble. Analysts are warning of a "global credit crunch" - meaning business could find it hard to raise money. Things aren't anywhere near as bad as that yet - the fear is they may become so.



Mark Gregory, BBC



Stock markets

associations of dealers in shares and/or goods ready for sale or distribution, doing business according to fixed rules



gloom

pessimistic or depressed mood



underlying the slump

being the basis of the sudden decline in trade or business



jump

here, sharp and sudden growth



gripped by

dominated or affected by



to take on risk

here, to invest into businesses or enterprises that aren't financially secure now but may become profitable in the future



reeling from

being seriously affected by



defaulting on loans

here, borrowing money but not being able to pay it back



corporate takeover

when one large company or corporation takes control of another



buy-out

the purchase of a controlling share in a company
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