World markets in turmoil - live blog

The FTSE 100 was down 3% in morning trading. Photograph: Rex Features

2.03pm: More people are probably familiar with "death cross" now than before the latest market turmoil (it is not the name of a heavy metal band).

For chartists and market technicians, the death cross is a strong bearish signal that indicates a major downward shift in trading momentum. In the case of the S&P 500, a death cross occurs when the 50-day average for the index sinks below - or crosses over - its 200-day average.

Alea_ alea has just tweeted:
Death Cross rocks Wall Street goo.gl/vUCA3

1.50pm: US futures are calling the Dow Jones down 140 points when it opens in 40 minutes. The FTSE is currently off 83 points at 5009, a fall of 1.6%. In Germany, the Dax is down 3% while the Cac in Paris has lost 2%.

1.35pm: Hedge fund Cairn has warned that France's highly-prized AAA credit rating is likely to be downgraded and Germany could easily lose its top rating too.

The London-based firm's chief investment strategist Graham Neilson told Reuters: "There are very deep economic flaws in the whole euro mechanism," citing high debt levels, weak growth, divergence between member states and the European Central Bank's focus on inflation expectations.

"France is likely to be downgraded either on its own metrics but more likely as a result of potentially higher EFSF costs. The bigger the EFSF, the more France is liable (and) the worse France's credit rating the more it could be liable."

Some commentators have suggested the EFSF, which will be able to grant loans to countries, buy sovereign bonds and lend governments money to recapitalise banks, needs to be raised to up to €1 trillion from €440bn. However, French president Nicolas Sarkozy and German chancellor Angela Merkel have resisted the pressure.

France's own economics could also lead to a downgrade, said Neilson. "France's banks are three times more exposed to Italy than any other banking system in Europe and France's debt metrics and growth profiles are poor."

He added that Germany was also vulnerable to a downgrade, which would increase its cost of borrowing and put further stress on the global economy after S&P's downgrade of the US earlier this month.

"Germany could also quite easily be downgraded if the EFSF is forced to be larger, in a scenario where France and Germany end up with debt to GDP ratios of 120-125%. That's not good, that's not AAA," he said, adding that is probably the reason why the EFSF has not been increased in size.

Neilson added that August's sharp market sell-off, which has already seen the FTSE 100 fall around 15% this month, is throwing up other opportunities for bargain-hunters. "There are some of the best opportunities of the past two-to-three years around," he said. "Certain assets have overshot to the downside and over the past week you've seen the real whiff of fear in the market."