World Stocks Down Amid Fears of Deep Recession

World stocks fell sharply Thursday as fears of a deep global recession gripped markets and sent oil prices below $50 a barrel to levels not seen in more than three years.

U.S. stocks capped another dismal day for world equity investors, with the broad Standard & Poor's 500 index ending at its lowest closing level since April 1997, falling 6.7 percent to 752.44. The Dow Jones industrial average, meanwhile, shed 444.99 points, or 5.6 percent, to 7552.29, its lowest close since March 2003.

Trading was almost as bleak in Europe, where the FTSE 100 index of leading British shares closed down 130.69 points, or 3.3 percent, at 3,874.99, while Germany's DAX lost 133.89 points, or 3.1 percent, lower at 4,220.20. The CAC-40 in France was 107.47 points, or 3.5 percent, lower at 2,980.42.

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In Latin America, Mexico's benchmark IPC index dropped 2.1 percent to 18,191. Argentina's Merval index fell 6 percent to 869 as the senate debated a government takeover of private pension funds and Chile's IPSA index slipped 3.6 percent to 2,401. Brazilian markets were closed for a holiday.

The latest bout of selling in the U.S. was stoked by a Labor Department report showing that new applications for jobless benefits unexpectedly rose to a 16-year high of 542,000 last week from a downwardly revised figure of 515,000 in the previous week. Analysts had been expecting a modest decline to around 505,000.

The gloomy global economic outlook was reflected in oil prices. Light, sweet crude for December delivery fell 7 percent, or $4, to settle at $49.62 on the New York Mercantile Exchange. Benchmark crude fell as low as $48.50 a barrel in Nymex trading, levels last seen on May 18, 2005, when oil hit $46.80 a barrel.

Oil prices have fallen 66 percent since reaching a record $147.27 a barrel in mid-July.

Stocks have been in retreat for most of the week amid concerns about the global economy after further grim U.S. economic news and as the Big Three Detroit-based automakers pleaded to be bailed out by Congress.