(11am update) Stockmarkets around the world slumped overnight as the global recession showed signs of deepening and pushed down financial, manufacturing and energy shares.

On Wall Street, the benchmark S&P500 dropped below the 800 mark for the first time since November. It was down 4.6% to 789.17. The main Dow Jones index fell 297.81 points, or 3.8%, to 7552.6.

Meanwhile, hedge investment gold climbed to a seven- month high.

US financial stocks Bank of America, Citigroup and JPMorgan Chase led the retreat on Wall Street, losing at least 8.5% as the markets opened after a three-day weekend.

Exxon Mobil was down 6% as oil slid more than 7%. General Motors lost as much as 18% before taking its case for more government support to the Treasury.

The only Dow company to rise was Wal-Mart Stores, which added 3.1% after fourth-quarter profit fell less than analysts estimated.

In Europe, Swedbank and UniCredit declined more than 7.3% and the euro fell below $US1.26 for the first time since early December after Moody’s said it may downgrade banks with units in eastern Europe.

Banks from Sweden, Italy, Austria, France, Belgium, Germany and Sweden account for 84% of western European bank loans in eastern Europe, where economies have gone into sharp decline.

Europe’s Dow Jones Stoxx 600 sank 2.5%. Austria’s ATX Index slid 8.3% after Moody’s said the country’s banking system is the “most exposed” to east and central Europe.

The UK benchmark FTSE 100 fell 100.62 points, or 2.4%, to 4034.13, its lowest since November 21.

Germany’s DAX fell for a second day – down 3.4% to 4216.6 – while France’s CAC 40 lost 35.64 points, or 1.2%, to 2962.22.

Commodities; Oil down, gold up

Crude oil fell below $US35 a barrel in New York on fears the recession is worsening and depressing demand. Prices for March delivery fell $US2.81, or 7.5%, to $US34.70 a barrel, taking the decline this year to 22%.

Gold jumped to the highest price since July on speculation that low interest rates and government spending will devalue currencies. Silver and platinum also rose.

Gold priced in euros and pounds reached records as world sharemarkets slumped.

Futures for April delivery gained $US31.70, or 3.4%, to $US973.90 in New York. Earlier, the price reached $US974.90, the highest since July 22.

Currencies: Yen rises

The yen rose after two days of losses against the dollar as G7 finance ministers said the “severe” global slump will persist for most of 2009. Japan’s economy shrank by the most since 1974, spurring investors to sell riskier assets.

The pound fell versus the dollar after the Confederation of British Industry said the UK economy will contract at almost twice the pace previously forecast this year. The euro also dropped against the dollar.

The yen dropped to ¥117.21 per euro and gained to ¥91.77 against the dollar. The dollar strengthened to $US1.2770 per euro.

The pound dropped to $US1.4267 and rose to 89.49p per euro.