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Shares fall as confidence in US and EU economies falters

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Businesses may look to make at international money transfer to secure their worth in other territories as shares tumble across Europe and the United States over fears of increasing national debts.

The FTSE 100 index plunged more than 90 points to 5,752, which has reduced the value of Britain's biggest companies by almost £24 billion.

European shares also experienced a downturn as fears that the eurozone debt crisis could spread to Italy and Spain.

Furthermore, US shares tumbled as politicians in Washington D.C. failed to come to an agreement over the country's rapid climb towards its debt ceiling.

The US government will reach its maximum borrowing allowance early next month unless legislation is passed that allows it to raise limits.

However, this requires cooperation between Democrats and Republicans who have locked horns over the issue.

The former camp wants the cap raised, while the latter will only agree to it if taxes are also slashed.

Financial experts fear that a possible default by the US, the first in its history, could damage international markets and the global banking system.

David Jones, chief market strategist at spread-betting firm IG Index, commented: "The market remains wary of European sovereign debt, and the disturbing lack of process on agreeing terms to raise the US debt ceiling is also raising the tension."

Confidence in the economy was further damaged as financial experts criticised the "stress tests" on 90 European banks that didn't take into account the risk of certain eurozone countries defaulting on debts.

For example, UK banks HSBC, Barclays, Lloyds and the Royal Bank of Scotland all passed the test despite having £200 billion invested in weak European economies.

Greece, Ireland and Portugal have been given around £240 billion in emergency funding by the European Union and International Monetary Fund, while Athens has called for a second bailout as the crisis threatens to spread to Italy and Spain.

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