US President Barack Obama defended the country\'s credit as battered markets tumbled further Battered markets tumbled further on Monday despite world leaders vowing to bolster financial stability with Barack Obama defending US credit and the European Central Bank intervening to stem a debt crisis. Finance ministers and central bankers from the Group of 20 industrialised and emerging economies pledged to \"take all necessary initiatives in a coordinated way to support financial stability and to foster stronger economic growth in a spirit of cooperation and confidence.\"
Their statement came after Asian stock markets suffered heavy losses after Friday\'s unprecedented US ratings downgrade.European trade saw promising gains on the ECB action, but these melted away by noon and the losses deepened after Wall Street opened.
US stocks plummetted in afternoon trade, with the Dow Jones Industrial Average down 4.4 percent to below the 11,000 level for the first time since November.The broader S&P 500 lost 5.5 percent, while the tech-heavy Nasdaq Composite plunged 5.7 percent in the sell-off.US stocks hit fresh lows for the day as President Barack Obama gave a televised speech in which he defended Washington\'s credit-worthiness and declared that the United States \"always will be a triple-A country\".Standard & Poor\'s lowered the US long-term sovereign debt rating from AAA to AA+ after markets closed Friday, citing Washington\'s inability to rein in its deficits and reduce its debt of more than $14 trillion.The G20 stressed that its members would maintain constant contact \"to ensure financial stability and liquidity in financial markets.\"
Earlier, the Group of Seven (G7) industrialised countries -- Britain, Canada, France, Germany, Italy, Japan and the United States -- made a similar commitment.
Economists warned that even the long-awaited ECB intervention on bond markets was no \"silver bullet\" and that big obstacles remained to stabilising strained public finances and putting credible eurozone defence mechanisms in place.
The G7 and G20 statements came after a whirlwind of weekend conference calls between political leaders and officials who saw storm clouds hovering over the markets brought on by the US downgrade.
Markets had already been concerned about a slowdown in the world\'s biggest economy, and have been fleeing stocks and assets that would be hit by recession and uncertainty.
On Sunday, the ECB said it would \"actively implement\" a programme that buys eurozone bonds, a measure which seemed to be working Monday as pressure eased on Italian and Spanish government debt.That was also helped by Italy and Spain announcing measures to curb deficits and debt, and France and Germany pushing for full and rapid implementation of measures agreed at an emergency eurozone summit last month to protect the euro.
\"However, we think it would be optimistic to assume that this response will be sustained or that the bond purchases will do much to address the eurozone’s fiscal crisis,\" Capital Economics chief economist Jonathan Loynes said.
Asian stock markets were the first to give a group reaction to the US downgrade and prospect of a serious global economic slump.
Tokyo shed 2.18 percent, Hong Kong lost 2.11 percent, Sydney fell 2.91 percent, Seoul sank 3.82 percent and Shanghai lost 3.55 percent.
In Europe, stock markets initially showed signs of resilience but later began a slide that accelerated once Wall Street opened.
 London\'s FTSE-100 index closed down 3.39 percent to 5,068.95 points, while in Frankfurt the DAX dropped 5.02 percent to 5,923.27 points. In Paris, the CAC-40 slid 4.68 percent to 3,125.19 points.
Markets in Madrid and Milan initially bounced higher as news of the ECB\'s intervention, but they also got caught up in the sell off, losing 2.44 percent and 2.43 percent respectively.
Safe-haven gold surged to a record $1,715.75 per ounce, before finishing the day at $1,693. The euro slid to $1.4234 from $1.4282 on Friday in European trade.
Oil plunged by more than six percent. New York\'s main contract, West Texas Intermediate (WTI) light, sweet crude for delivery in September, fell $5.57 to close at $81.31 a barrel on the New York Mercantile Exchange, its lowest level since November.
IHS Global Insight chief economist Howard Archer said the ECB was building an essential firewall for Madrid and Rome but could not be content with \"half-hearted measures in exercising its function as \'true lender of last resort\' - the markets need to be absolutely convinced.\"Deutsche Bank economist Gilles Moec said the focus would now shift to the lending capacity of the European Financial Stability Facility (EFSF), the eurozone\'s rescue fund that is too small to bail out Italy or Spain if they go the way of Greece, Ireland and Portugal.But a German government spokesman said there were no plans to boost the 440-billion-euro ($625-billion) EFSF, which is supposed to take over bond buying from the ECB as soon as possible.The ECB is the only European institution capable of acting fast and keeping at bay so-called bond vigilantes who strike fear into finance officials.But Barclays Capital economists warned that it might be hard to buy enough government debt to keep the pressure off for long.Goldman Sachs economists estimated the ECB would have to purchase at least 100-130 billion euros worth of Italian and Spanish bonds, compared with the total amount it had held until now of 74 billion euros.Italy, the eurozone\'s third largest economy, saw its borrowing costs hit record highs last week.