Credit markets in the US and Europe were battered by the flight from risk as recession fears and the unwinding of leveraged bets by bank trading desks and hedge funds pushed the cost of protecting bonds against default sharply higher.

The indices of mainly junk-rated companies were hardest hit, with the iTraxx Crossover list hitting an all-time high of 793.7 basis points, more than 22bp wider on Wednesday, according to Markit Group.