Traders have dived for cover over the talk of recession has increased, as week economic figures from Germany and China both possibly heading into a recession along with a 0.1% contraction in the second quarter has spooked the FTSE.

The FTSE 100 closed on Wednesday down by 14% to 7,147.88 or 103.02 points. The French Cac closed at 2.08% while the German Dax closed slightly higher by 2.19%.

Tensions were further raised as both the UK and US saw inverted yield curvesas short term government bonds pay more than longer term. This is an indication that the City sees as a sign of trouble ahead.

Connor Campbell, financial analyst at SpreadEx said, “If the warning signs of second quarter contractions in the UK and Germany weren’t enough, this inversion, which last appeared as a harbinger of the financial crisis, caused investors to seriously chew over the idea that a recession is approaching.

“Predictably, this translated to some rather nasty losses.”

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