Crisis enters a new phase

The FTSE went below 5,000 for the first time since October, whilst Asian stocks hit a ten-month low. So are we entering a new phase of the financial crisis?

"The smell of fear is in the air," said Tom di Galoma of Guggenheim Partners. A wave of risk-aversion swept markets early this week, sending the FTSE below 5,000 for the first time since October. Asian stocks hit a ten-month low. Commodities also tanked, with oil at a three-month low, while gold soared.

The three-month interbank dollar lending rate (Libor) reached a ten-month high. The VIX index, a key gauge of risk-aversion, has risen almost threefold since mid-April. While stocks recovered on Wednesday, the mood remained nervous and the euro stayed close to a four-year low against the dollar.

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