Stock markets in London and Europe yesterday suffered their biggest one-day falls since the terrorist attacks of September 11 2001 as investor concerns about the economic outlook and financial market turbulence snowballed into a sweeping sell-off.

The global rout in equity markets - which began yesterday and continued in Asia early today - was fuelled by the prospect of a US recession and more fall-out from credit market turmoil, which prompted near-panic among investors, who rushed to the safety of government bonds.