U.S. stocks plunged for the seventh session in a row Thursday. The closely-watched Dow index fell a stunning seven percent, and other major indexes posted dramatic drops as well.
European markets closed earlier with a loss of as much as two-point-five percent. Investors appear unconvinced that recent moves by authorities worldwide will be enough to re-start stalled credit markets and avert a global recession.
The massive stock sell-off comes as White House officials said the United States might buy shares in some of the nation's banks to calm markets. The plan would inject cash into the country's banking system in a bid to encourage banks to resume lending.
Earlier Thursday, the head of the International Monetary Fund said the world is on the brink of a global recession but predicts the economy will begin to recover by late 2009.
Dominique Strauss-Kahn said nations must work together to avert a global recession. He says this week's coordinated interest rate cuts around the world are a good example of the international cooperation needed to restore faltering economies. He also said the IMF activated an emergency program Wednesday that allows the fund to provide loans more easily and quickly to emerging countries in economic trouble.
The IMF chief made the remarks in Washington D.C., as top officials from IMF nations and the G-7 industrialized countries are gathering for meetings on economic issues. U.S. President George Bush is set to meet with G-7 finance ministers at the White House on Saturday. World Bank President, Robert Zoellick is urging officials not to forget poor countries as the world crafts responses to the financial crisis. Speaking in Washington, he said the crisis is hitting some developing nations hard because they are already struggling with high food and fuel costs.