The governing council of the European Central Bank has decided to buy bonds from Italy and Spain as it attempts to defuse the latest eurozone debt crisis.
Meanwhile, markets fell overnight in Asia, were mixed in Europe and suffered losses after opening in the US after the first-ever downgrade of the US government's credit rating by Standard & Poor's on Friday.
G7 Finance Ministers have said they will take all necessary measures to promote stability.
Main developments:
ECB to buy Italian, Spanish bonds
US markets fall sharply
Volatile trading on European markets
Tokyo stocks close down 2.18%
Spanish, Italian debt yields fall
Gold soars above $1,700 per ounce
2219 Sao Paulo stock exchange has closed down 8%.
2115 The broader S&P 500 fell 6.6% and the tech-heavy Nasdaq dropped 6.9%.
2102 In what is the worst day for the Dow Jones since 1 December, 2008 it has closed down 633 points, or 5.5%, to stand at 10,811.
2048 The Dow Jones is currently down over 600 points.
1958 There has been no talk about imposing stronger regulations on credit ratings agencies in the wake of the downgrade in America's credit rating, the White House said.
Spokesman Jay Carney told reporters he was aware of no such conversations
1942 The price of oil has fallen more than 6% in New York.
1919 The Dow Jones has fallen 500 points since the start of trading.
1901 'No matter what some agency may say, we always have been and always will be a AAA country,' says Mr Obama.
1900 While Obama is speaking, the Dow Jones is falling. It has now lost 430 points so far today.
1857 Obama has said tax reform that asks those who can afford it to pay their fair share, as well as changes in Medicare are needed for the US to address the crisis.
1855 US President Barack Obama is speaking to the media following another day of turmoil on global stock markets - watch live here.
1846 The European Central Bank's decision to buy the two countries' bonds has brought some stability to the bond markets today.
This evening, the yield, the interest rate demanded by investors, on the Italian ten-year government bond was 5.34%, down sharply from 6.189% on Friday evening.
The Spanish 10-year bond was at 5.2% from 6.271%. Yields on Irish bonds were also lower, with the 10-year yield at just over 10.1%.
The scale of the ECB intervention will not be known until next Monday, however, with the bank only releasing information on its bond holdings once a week.
1720 In Dublin, the ISEQ index ended down 111 points (4.4%) at 2,396.
1649 Germany's Dax has closed down 5.02%, while the Cac in Paris closed 4.7% lower. The ISEQ has a provisional close of 2418, down 3.5%.
1640 The FTSE closed 3.4%, or 178 points, lower at 5068.95 - the first time in its 27-year history that it has registered falls of more than 100 points for four sessions in a row.
1612 US President Barack Obama is to make a statement on the economy this evening.
It will be his first public remarks since Standard & Poor's downgraded America's top notch sovereign debt rating.
1532 The ISEQ index of Irish shares is down over 3% at 2,430 points. London's FTSE has shed 2.3%, Germany's Dax has fallen 3.5% and the Cac in paris is down 2.8%.
1528 Ratings agency S&P has downgraded US mortgage giants Fannie Mae and Freddie Mac.
1456 Athens stocks drop more than 5%
1442 The Sao Paulo stock exchange, South America's largest, opened 4.59% lower, officials said.
1433 The S&P 500 dropped 2.1% to 1,174.15, while the Nasdaq plummeted 3.3% to 2,449.28.
1432 Dow falls 1.7% at open, following S&P downgrade of United States.
1430 The NYSE has opened.
1420 We'll be carrying the NYSE opening bell live. Watch it here from 1430.
1417 Shares on the Paris bourse dropped by more than 3% shortly before Wall Street opened, but quickly clawed back some ground.
1412 Minister for Finance, Michael Noonan, has told RTÉ's News at One the ECB intervention seemed to be working, as Italy and Spain were now well out of what he called 'bailout territory'.
Mr Noonan said there was very little impact on Ireland so far, but the Government was closely monitoring the situation.
He said, however, that Ireland was reasonably well positioned, following recent EU decisions, including the cut in the interest rate on Ireland's emergency loan. He said Ireland could be dragged into difficulties by external forces.
1257 Ratings agencies are given too much importance, Standard & Poor's has said today. This is despite its own US rating downgrade sparking untold turmoil on global markets.
'Everyone seems to have just discovered we exist but we have been rating businesses and countries for decades,' said Carol Sirou of S&P France in remarks to the Liberation daily today.
'The role ascribed to us is much greater than is really the case,' Ms Sirou said.
'The market is making us play a role that is not ours to play,' she added, saying that current market nervousness 'is due more to an economic slowdown than the ratings agencies'.
1246 Economist at Goodbody Stockbrokers in Dublin Dermot O’Leary has told Reuters: ‘It looks like we are in for another volatile week’.
‘Leaders have come out with strong statements that they will do what is needed but markets will be looking for real action.’ Mr O’Leary said.
London's benchmark FTSE 100 index was down 1.83% by midday, while Frankfurt plunged 2.66% and Paris gave up 2.35%.
1225 The head of Italy's Northern League party appeared to indicate there would be no emergency cabinet meeting this week to discuss accelerating moves to bring the budget into balance.
Umberto Bossi, leader of Prime Minister Silvio Berlusconi's main coalition partner, shook his head when asked if there would be an emergency meeting of the cabinet this week to approve the new measures. He did not make any direct comment.
1213 Italian business leaders have signed a newspaper petition offering to buy domestic government bonds to help the country avoid financial disaster as the eurozone debt crisis spreads.
'If Italy needs our help, we're here,' said the appeal, signed by the chief executives of some of Italy's biggest companies.
'No, we won't stand by and watch Italy being made penniless,' the 24 signatories said in an appeal launched by business daily Milano Finanza at the weekend.
1155 The Dublin market is down almost 3%, but there is better news from the bond markets where Ireland's cost of borrowing narrowed from almost 10.4% to 10.25%.
1145 The Athens Exchange has opened with a loss and gone on falling to show a drop of 4.79% at midday.
The Athens Stock Exchange index Athex was standing at 1,011.01 points.
1143 A German government spokesman has denied that a joint statement issued with France yesterday had made any stronger pledges about the euro zone rescue fund's commitment to purchase the bonds of weak member states on the secondary market.
‘Nothing changes from the agreements reached (by European leaders) on July 21,’ government spokesman Christoph Steegmans told a news conference today.
In the statement, German chancellor Angela Merkel and French president Nicolas Sarkozy said the EFSF rescue fund would be able to intervene in the markets to buy bonds in the future on the basis of an ECB analysis and expressed confidence that this analysis would provide the ‘basis for secondary market interventions’.
This appeared to go beyond the agreement reached at the 21 July summit, when leaders agreed to allow secondary market purchases by the EFSF, but also spelled out clear limits on such purchases.
1125 The pressure on Italian and Spanish government debt has eased sharply this morning following the ECB move.
The yield, the interest rate demanded by investors, on the Italian 10-year government bond was 5.35%, down sharply from 6.189% on Friday evening. The Spanish 10-year bond was at 5.3% from 6.271%.
Yields on Irish bonds were also lower this morning, with the 10-year yield down to 10.22%.
1123 World oil prices have dipped over fears of slowing energy demand in the United States.
New York's main contract, West Texas Intermediate light, sweet crude for delivery in September, dropped $3.40 to $83.48 a barrel.
Brent North Sea crude for September shed $3.37 to $106 in London deals a short time ago.
1121 Swiss stocks have dropped back into negative territory during midday trade.
But by midday, the Swiss Market Index was down 1.6% to 5,089.45 points, with bank shares, which were up in the morning, also giving up gains as concerns over the global economy took hold.
1105 The FTSE has slumped again, trading down 1.9% at 5,148 points.
1054 A graph shows the trajectory of today's trade on the Hong Kong's Hang Seng index, which closed earlier 2.11% lower.
1045 An Indian officegoer walks past a barricade outside the Bombay Stock Exchange earlier today.
1040 Italian stocks have fallen back into negative territory, after shooting up 4% in earlier trading. The benchmark FTSE Mib index in Milan was down 0.59% a short time ago.
1032 The Frankfurt DAX index has plummeted 2.56% to 6,076.80 points in late morning.
The DAX had opened with a loss of 1.05%, then rebounded close to positive territory, before sinking again as trade progressed.
1031 In Dublin, the ISEQ index is now trading at 2,470 points, down 1.5%.
1028 Leading members of German chancellor Angela Merkel's Christian Democrats have called for more say over Berlin's European policy, signalling growing opposition to its line on the euro zone debt crisis.
Senior CDU lawmakers called for a special party conference. ‘The government should not make decisions of such importance without the agreement of the party,’ Michael Fuchs, deputy floor leader for Merkel's conservatives in parliament, told Der Tagesspiegel daily.
Philipp Missfelder, the CDU's foreign policy spokesman in parliament, urged the CDU to bring forward its party conference planned for November to immediately after the summer break.
‘By no means should solitary decisions present a future transfer union as a fait accompli,’ Mr Missfelder told Bild daily, referring to top-performing European states subsidising poorer ones.
Marco Wanderwitz, another CDU lawmaker, told Bild: ‘We are talking about the very foundation of the Europe policy until this point - a party conference must decide this.’
1009 German Economy Minister Philipp Roesler has reiterated Germany's irritation at calls from European Commission president Jose Manuel Barroso for a reassessment of the eurozone rescue fund.
In an interview with German weekly Focus, due to be published Sunday, Mr Roesler said: ‘We are acting with determination to put the decisions from the July 21 summit into place.
‘Questioning these decisions just two weeks later has the opposite effect of worrying the markets.’
Mr Roesler already rejected Mr Barroso's call for a ‘rapid reassessment’ of the rescue fund on Thursday, saying: ‘It is not clear how reopening the debate just two weeks after the summit can lead to calming the markets’.
0949 Reuters is reporting that credit ratings agency Moody's has repeated a warning that it could cut the US rating before 2013 if the fiscal or economic outlook weakens significantly.
But Moody's said it saw the potential for a new debt agreement in Washington to cut the budget deficit before then.
0932 US government bonds have firmed slightly and borrowing rates eased on the sovereign debt market in Europe despite the decision by Standard & Poor's to downgrade the US AAA rating on Friday.
The yield, or borrowing rate, on US 10-year bonds eased to 2.533% from 2.558% on Friday and the yield on US 30-year bonds fell to 3.820% from 3.846%. Short-term yields were steady at zero percent.
0909 Hong Kong's Hang Seng index has closed 2.11% lower.
0902 Markets in Paris are up over 1%, while London added half a per cent and shares in Frankfurt are flat after earlier losses.
Shares on the Dublin markets have gained 1.5% so far this morning.
0900 Italian stocks have also received a bounce from the ECB bond-purchasing plan. The benchmark FTSE Mib index in Milan rose 4.08% having opened down 0.09%.
0857 The managing director of Standard and Poor's, which downgraded US sovereign debt over the weekend, has warned of possible further downgrades if Washington fails to get its fiscal house in order.
'If the fiscal position of the United States deteriorates further, or if the political gridlock becomes more entrenched, then that could lead to (another) downgrade,' S&P ratings head John Chambers told ABC television.
0854 The pressure on Italian and Spanish government debt has eased sharply.
A short time ago, the yield or the rate of return earned by investors on the Italian 10-year government bond was 5.417%, down sharply from 6.189% at the close Friday.
The Spanish 10-year bond was at 5.285%, down from 6.271% on Friday.
0852 Madrid stock prices have surged 3.31% in early trade, led by bank shares, suggesting that the ECB purchase of Spanish bonds is having some effect.
0850 Hong Kong shares traded down 1.9% in late afternoon trade, partially recovering from a more than 4% slide earlier.
0829 French share prices edged up in early trade, gaining 0.15%, after the ECB said that it would support the market for bonds issued by distressed eurozone countries.
0825 The ECB is ready to buy Spanish and Italian government debt, French Finance Minister Francois Baroin has said.
Budgetary measures announced at the weekend by Spain and Italy 'have enabled the ECB to consider that, given that they are moving in the right direction, it was legitimate to help them,' Mr Baroin told Europe 1 radio.
0823 French stocks have edged up after early losses.
0812 Italian stocks shoot up 3% after opening lower.
0811 Chinese shares close down 3.79%.
0809 Italian stocks slightly lower, down 0.09% at open.
0805 In a joint statement, G20 nations say they are ready to act together to stabilise markets. It said member states would remain in close contact and act as necessary to 'ensure financial stability and liquidity in financial markets'.
Elsewhere in London, the FTSE 100 has opened down 1.2%.
0804 Frankfurt stocks fall 1.05% at the open. Meanwhile, it has been reported that the ECB is ready to buy Spanish and Italian debt.
0736 Russian shares open down over 2.5% on global economy worries.
0706 Stocks in Tokyo have finished trading down 2.18%.
