Update: Dow opens down as FTSE stabilises

The Dow Jones has opened slightly down, following a day of volatile trading in Europe.

After a bright start which saw indices in London, Germany and France all open higher, they all fell significantly in late morning trading, although they recovered towards the end of trading.

The Dow Jones was down 0.4% at 10,690.8, following a fall of 3.5% yesterday.

The initial slump, which began yesterday morning, was sparked by a Federal Reserve warning about the outlook for the US economy.

That also followed gloomy forecasts from the International Monetary Fund and World Bank about the global situation.

Reassurances on Friday from the G20 that it was ready to take action to stabilise markets failed to calm investors.

The FTSE 100, which earlier topped 5,100, was at 5,008.30 by 15:20pm, a fall of 35 points, or 0.7%.

Elsewhere in Europe, the German Dax and French Cac 40 have also recovered from earlier losses, but were still down 1.4% and 0.8% respectively

Fears of a second economic slump drove investors out of equities and into commodities.

Shares in Weir Group, Xstrata and Eurasian Natural Resources Corp all fell by 5% or more.

The Fed's announcement on Wednesday that it will stimulate the economy by selling short term bonds and buying longer term bonds failed to inspire confidence in global markets.