The dollar sank to fresh lows, commodity prices continued their gravity-defying run and Asian and European equities suffered hefty losses as worries about the US economy and the credit squeeze continued to dominate sentiment.

Talk of writedowns at European banks and worries about bond insurers helped drive credit spreads wider. In the US, the investment grade CDX North America index hit a new peak and its European equivalent climbed to within a few points of its recent record.