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London - World stocks were pummelled and the dollar slumped on Thursday as a sell-off on global financial markets in thrall to central bank stimulus accelerated.
European shares fell sharply at the open, dropping 1.3% after the second biggest fall in Japan's Nikkei in over two years left Asian shares at their lowest level of the year.
Heavy selling hit the dollar, which slumped 2% against the yen as investors spooked by the plummeting Japanese stock market unwound hedges.
It fell as low as ¥93.90, its lowest since April 4 and giving up most of the gains made since the Bank of Japan's aggressive monetary easing announced on that day.
The US currency dropped to a 3-1/2 month low against the euro with the common currency buying $1.3385.
The rout has also coincided with noises by the US Federal Reserve, which meets next Tuesday and Wednesday, about scaling back its huge asset purchase programme.
"The trend is still in principal is a sell-off in markets, a sell-off in riskier assets on the expectations that the Fed might signal further readiness to maybe slow down the rate of purchases," said Daiwa Securities economist Tobias Blattner.
"So all eyes are on the FOMC meeting next week. There is very little else that matters at the moment."
In the debt market, German government bonds rose 34 ticks as investors headed for traditional safe-haven paper. The recent selling of eurozone periphery debt also resumed ahead of auction of 3- and 15-year Italian debt later in the day.
