Trading in the shares of Lloyds and Barclays had to be suspended because their values fell so much

José Manuel Barroso’s warning came as stock markets plunged around the world amid growing fears of another global recession.
Mr Barroso called for an emergency strengthening of Europe’s bail-out mechanism. He said he had “deep concerns” about the faltering Spanish and Italian economies.
The stark message was delivered as the FTSE 100 suffered a 3.43pc fall, its biggest since the height of the banking crisis in March 2009.
In the past five days, investors have lost a total of £125bn.
The doubts spread to America as the Dow Jones Industrial Average fell 4.3pc to its lowest point since December 1 2008.

In other developments:
* The City watchdog asked British banks to reveal how much exposure they had to other European member states, including Belgium
* Trading in the shares of Lloyds and Barclays had to be suspended because their values fell so much
* BNY Mellon, one of the largest banks in America, said it would start charging some customers to deposit money as investors hoarded cash
* Switzerland and Japan were forced to cut interest rates to dampen demand for their currency from investors seeking a “safe haven”
Mr Barroso’s letter to European Council members came a fortnight after European leaders were congratulating themselves for bringing the Greek economy back from the brink with a £96bn bail-out.
He said the main reason for the market instability was the “undisciplined communication and complexity and incompleteness” of the Greek package.
Investors were not convinced that member states had a grip on the crisis.
Mr Barroso said he had “deep concerns” about Spain and Italy, as the cost of borrowing for both economies reached more than 6.2pc, close to the 7pc level at which the eurozone was forced to bail out Greece.
He called for the eurozone’s €440bn bail-out fund to be expanded to safeguard the euro because existing mechanisms were failing to calm the stock markets.
“Markets remain to be convinced that we are taking the appropriate steps to resolve the crisis,” he said. “We are no longer managing a crisis just in the euro-area periphery. Euro-area financial stability must be safeguarded.
“These developments…reflect a growing scepticism among investors about the capacity of the euro area to respond to the evolving crisis.”
Silvio Berlusconi, Italy’s prime minister, sought yesterday to play down the scale of the crisis by insisting that his country had “sound economic fundamentals”.
“Our banks are liquid, they passed the stress tests and Italian families are less indebted than others among the major economies,” he said.
Earlier, the Spanish government had to pay high interest rates in a bond sale as concerns about sovereign debts grew. Madrid sold €2.2bn of bonds maturing in 2014 at a 4.8pc average yield, up on the 4.29pc it offered in a sale this time last month.
The European Central Bank intervened in an attempt to stabilise the markets, announcing that it would offer unlimited loans to banks for the next six months. Jean-Claude Trichet, the bank's president, said: “The common aim should be to put public debt ratios and finances on a sustainable path as soon as possible.
“Substantial and comprehensive structural reforms need to be implemented in the countries of the euro area to increase the flexibility of their economies and their longer-term growth potential.”
In a day of increasing tension across Europe, Mr Barroso’s call to increase the size of the bail-out fund was immediately rejected by Germany, which said his comments could stoke further market uncertainty.
Jyrki Katainen, the Finnish prime minister, said Europe was “in a very dangerous situation” amid growing concern that the bailout fund was too small.
Howard Archer, the chief British and European economist for the financial analysts at IHS Global Insight, said: “There has always been a feeling that European leaders have been kicking the can down the road.
“But subsequent events have proved that the problems are still there.”
A tenth of the €440bn fund has been committed to the bailouts of Ireland and Portugal, with reserves to be further reduced by the Greek bailout.
Stock markets around the world dropped sharply as fears of a second recession gathered pace.
The FTSE 100 fell by 191 points, or 3.43pc, to 5,393, wiping almost £50bn off the value of Britain’s largest companies. Other European financial indexes followed suit, with the French stock market falling by 3.9pc, the German by 3.4pc, the Spanish by 3.89pc and the Italian by 5.16pc.
In America, the impact of the eurozone debt crisis was exacerbated by a slowdown in the country’s manufacturing and services sector, suggesting that the economic recovery has stalled.
Today will be critical for stock markets with the release of the latest monthly report on unemployment.
Wall Street is already expecting a weak report, with just 85,000 jobs created. Anything less risks triggering another wave of selling as investors run for cover.
The renewed anxiety over the economy is putting more pressure on President Barack Obama, whose poll ratings have dropped to a new low of 40pc this week. However, the White House and the Federal Reserve have little ammunition left to help shore up confidence.
In a sign of concern about declining returns from US stocks, investment houses have started to deposit large amounts of cash in banks, which are seen as safer options than stocks.
Gold prices dropped from record highs as investors sold their holdings to pay for losses suffered on the stock markets.
“When there’s this much bloodshed out there, nothing is impervious to this type of selling, not even gold,” said Matt Zeman, of Kingsview Financial.
British families’ living standards have fallen by almost five per cent over the past five years, said Douglas McWilliams, the chief executive of the Centre for Economics and Business Research. The centre forecast that, over a 25-year period, this figure will reach 25pc, meaning that over a single generation families’ quality of life will fall significantly.