Shares in New York have tumbled for the fifth day in a row and recorded their biggest weekly loss since stocks fell in the wake of the 11 September terrorist attacks.

The Dow Jones ended down 117 points at 8,685 - a fall of more than 7% since Monday morning.

These gyrations are scaring the genuine investors, they're just stepping aside

Peter Cogliatti Williams de Broe

The gloom was shared by investors on the other side of the Atlantic.

Leading shares in London had earlier closed at their lowest level since April 1997.

New five-year low

There were hopes that the markets were beginning to stabilise when shares on the London and other European exchanges surged on Friday morning.

But the turnaround came swiftly - when New York began to fall it dragged Europe with it.

New York endured a very volatile session - with the Dow Jones swinging between a loss of 201 points and a gain of 47 points.

London's leading FTSE 100 index closed just 5.9 points lower at 4224.1 - but that was a new five-year low.

And it meant that shares in the UK's 100 leading companies had lost 8.5% or £94bn ($145.7bn) of their value since last weekend.

'Shell-shocked'

Initially the Dow Jones index opened higher but when a key report from the University of Michigan showed that US consumer confidence had fallen, the markets reacted by falling sharply within minutes.

London reacted immediately. "The Michigan survey is what's kicked us down again. The bear market continues," said Peter Cogliatti at brokerage Williams de Broe.

"Everyone I speak to is shell-shocked and can't quite believe what's happening.

"These gyrations are scaring the genuine investors, they're just stepping aside," he added.

President's problems

But Ash Rajan of Prudential Securities in New York, said the consumer confidence figures were not solely to blame.

"We have to just go back to the intangible - that is, the corporate governance issue, the accounting irregularity issue, and just malaise in general that's caused this weakness."

The falling stock markets have added further to President Bush's difficulties.

The White House announced on Friday that the federal government was heading for a $165bn (£106.3bn) deficit this year.