World stock markets are facing a "Santa rout" after the latest US interest rate rise sparked a renewed bout of turbulence.
Wall Street shares fell sharply for a second session in a row after the move by the US Federal Reserve and its guidance for more hikes next year – in spite of fears over the global economy.
The latest rate increase – which was the fourth of 2018 – defied US President Donald Trump, who has conducted a Twitter campaign against any further rises.
It also upset markets, sending the Dow Jones 350 points, or 1.5%, lower on Wednesday, and by nearly 500 points, or 2%, on Thursday.
Meanwhile the oil price also fell sharply, with a barrel of Brent crude slipping more than 3% to below $55 a barrel to its lowest level in more than a year.
In London, the FTSE 100 opened 1.5% lower, hitting fresh two-year lows, though it later recovered some of its losses and was 0.8% in the red by the close
European markets fared worse though, with France's Cac 40 down by 1.8%, Germany's Dax off 1.4%, Italy's MIB down 1.9% and Spain's Ibex by 2%.
The steep falls, adding to several weeks of turbulence, represent an unseasonal jolt for markets, which have become accustomed to enjoying a "Santa rally" heading towards the end of the year.
It was not the widely-expected rate hike itself that gave investors a headache so much as forecasts released by the Fed about what it expected to do next year.
These suggested two further increases in 2019.
That was less than the three it had previously pencilled in, with the Fed acknowledging some of the threats facing the global economy and slightly scaling back its outlook for US GDP growth in 2019.
But it was still a greater number of hikes than investors were hoping for given the parlous state of financial markets and a cocktail of anxieties including the US-China trade spat.
Markets worry about the impact of higher borrowing costs squeezing consumers and businesses in the world's biggest economy as well as the knock-on effects across the globe – such as in those countries which have borrowed heavily in dollars to fund growth.
Russ Mould, investment director at AJ Bell, said: "Rather than the traditional Santa rally, equities are enduring a Santa rout.
"A rate hike was widely expected when the US Federal Reserve met last night but the extremely negative market reaction reflects what was said alongside the decision by Fed chief Jerome Powell.
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"Powell delivered a bit of a double whammy, flagging lots of worrying risks to the economy but still committing to two further rate increases in 2019.
"The scale of the response reflects just how fragile investor confidence is."