Share prices crumbled again today as recession stalked the US economy on still more bleak economic news and as governments mobilised to confront the coming downturn. European exchanges fell hard shortly after the start of trade on Wall Street, where gloom deepened on news that the current banking and credit crisis had taken a sharp bite out of the manufacturing sector. The Federal Reserve said US industrial production plunged 2.8 per cent in September, the steepest decline since 1974. "Today's industrial production report was one of the worst ever," said Aaron Smith on Economy.com. A separate report by the Philadelphia Federal Reserve on factory activity in the mid-Atlantic eastern region also showed extremely weak conditions. The index plunged 41 points ? its biggest drop ever ? to minus 37.5, the worst level since 1990. "Recession is on its way," said Carl Weinberg, chief economist at High Frequency Economics. "The seeds of recession germinated during the (credit) crisis and the likelihood is that most of the world ? although not China ? will be in recession long after the uncertainty about the world's banking sector has dissipated." The heavy falls on US, European and Asian exchanges yesterday and today occurred in the absence of major finance sector catastrophes, suggesting that investor jitters now stem from the likelihood of recession in the United States and Europe. In fact, two key interbank lending rates, Libor and Euribor, eased further on today despite the sharp losses on world stock markets, an indication that banks were becoming less reluctant to lend money among themselves. Bank skittishness over the past few weeks, when lenders were weighed down by soured mortgage-related debt, had contributed to an acute credit crisis that threatened the health of the global financial system. In Europe today, the London FTSE 100 index of leading shares fell 5.35 per cent to close at 3,861.39 points, while in Paris the CAC 40 lost 5.92 per cent to finish at 3,181. The Frankfurt Dax closed 4.91 per cent in negative territory at 4,622.81. Elsewhere there were declines of 5.69 per cent in Amsterdam, 6.54 per cent in Brussels, 3.26 per cent on the Swiss Market Index, 4.11 per cent in Madrid and 6.78 per cent in Milan. Both of Russia's main stock markets dropped more than nine per cent today after steep falls in the United States and Asia added to investor concerns about plunging oil prices. The headline index on the dollar-denominated RTS exchange shed 9.52 per cent to close at 713.90 points, while the benchmark index on the rouble-denominated MICEX market dropped 9.11 per cent to close at 626.85 points. The day's rout began in Asia, where the Tokyo exchange gave up 11.4 per cent, its worst showing in more than two decades. Elsewhere, Hong Kong lost 4.8 per cent, Seoul sank 9.4 per cent, Mumbai shed 2.11 per cent and Sydney tumbled 6.7 per cent. * AFP