Stock markets in the US and Europe tumbled on Thursday after Chinese authorities failed to deliver a stimulus package expected by many investors and European central banks slashed interest rates in response to a worsening recession.

The global turmoil combined with continuing concerns about US banks - Citigroup fell below $1 a share at one point - to send the S&P 500 skidding 4 per cent to its lowest level since September 1996. Germany’s Dax lost 5 per cent, France’s Cac 40 fell 4 per cent and the UK’s FTSE 100 dropped 3 per cent.