Threat of second correction looms

Managers have warned investors a further correction in European markets is likely despite shares having already fallen 25% since the start of July.

German MPs voted in favour of increasing the country’s commitments to the European Financial Stability Facility last Thursday, but investors are concerned European policymakers have failed to come up with a more concrete resolution to the continent’s debt crisis. Plans to expand the bailout fund were announced in July but volatility in the markets has intensified amid concerns Europe’s heavily indebted banking system needs to be recapitalised. This morning markets were once again in the doldrums, with UK and European indices off around 2% after a sell-off in the US on Friday and losse...