The US dollar fell to an all-time low against the euro Monday, oil surged to new highs and Asian and European shares slipped back on fears of a US recession and further fallout from the global credit crisis.

The dollar touched $1.5275 to the euro and fell to a three year low against the yen of Y102.62 before rebounding later as investors found some comfort in better than expected US manufacturing data.

But worries about fresh writedowns at European banks and concerns about prospects for US bond insurers, kept investors on edge.

David Bowers, managing director of global strategy at Absolute Strategy, said: “Despite US real-economy data that was broadly in line with expectations, risk aversion remains very high”.

Indeed, the cost of protecting corporate debt against default, as measured by key credit derivatives indices in both the US and Europe, traded at record levels.

The price of oil, meanwhile, reached $103.95 while a range of other commodities, including corn, rice and soybeans, hit record levels.

Gold, seen as a safe commodity and a hedge against inflation, rose as high as $989.30 an ounce while some investors fled to the safety of government bonds.

Thierry Lacraz, strategist at Pictet & Cie, said: “People have lived through recessions before but the big thing is what a US recession will mean for the banks’ balance sheets. Investors are extremely nervous.”

Steep falls in Asian stock markets weighed on the UK and European indices, which ended the day broadly lower. US equity indices hovered near their 52-week lows.

Adding to the gloom, Warren Buffett, the billionaire investor, said in a CNBC interview that he was no longer offering to guarantee $800bn worth of municipal bonds backed by US bond insurers at the centre of the credit market maelstrom. John Wraith, strategist at RBS Financial Markets, said: “Equities continue to reflect growing nervousness that the deep and serious slowdown priced in for some time by credit markets may indeed be evolving in the US”.