The European single currency nosedived to an 18-month low today and equities slumped as markets were hit by fresh euro zone crisis concerns that also sent gold soaring to new record peaks.
The euro tumbled to $1.2359 this afternoon, striking a level which was last seen on October 28, 2008.
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Markets were also spooked after Paul Volcker, a special adviser to President Barack Obama and a former Federal Reserve chairman, warned last night of the 'potential disintegration' of the euro, analysts said.
'Clearly, I think we have to say that the euro failed and fell into a trap that was evident at the beginning,' Volcker said at an event in London.
'I think Europe's going to have to decide in the end whether to get more integrated or to get less integrated, in which case the euro is the question,' he stated.
In commodity trading, gold prices hit a record peak near $1,250 an ounce, as investors sought a safe-haven in the precious metal amid mounting concerns over the eurozone situation.
Gold jumped as high as $1,249.40 an ounce this morning on the London Bullion Market.
Oil futures plunged by about $2 a barrel as traders reacted to euro zone economic concerns and the strong US currency, which makes dollar-priced crude more expensive for foreign buyers.
The euro has languished against the dollar all week on stubborn concerns at Europe's economic woes, with a €750 billion rescue package from the EU and IMF failing to calm markets.
The euro has also been badly hit by concerns about the ability of euro zone nations such as Greece, Portugal and Spain to impose severe austerity measures to rein in soaring public deficits.
