Financial markets reversed yesterday on concerns that Asian central banks were diversifying out of US dollar assets and that demand for oil would remain persistently strong.

The dollar fell sharply in foreign exchange markets, crude oil prices jumped back above $50 a barrel and stock prices declined worldwide. The Dow Jones Industrial Average closed 1.61 per cent lower at 10,611.20, and the S&P 500 lost 1.45 per cent to 1,184.16 - their biggest single-day falls since August.