Worldwide share prices have continued to fall, triggered by Tuesday's 9% losses on the Shanghai stock market.

The UK's FTSE 100 index fell by 1% in morning trading. That took declines in the past two sessions to 3.2% and knocked £52bn off its total value.

France's Cac 40 index dropped by 1% and Germany's Dax lost 1.1%. Earlier, markets in Asia, Australia and India had all suffered substantial losses.

Investors are questioning the outlook for economic and earnings growth.

The current global stock sell-off was fuelled by speculation that China's government would try to clamp down on illegal share trading and might impose a capital gains tax on stock market earnings.

Stock prices and indexes had climbed to record levels in a number of key world markets, prompting some analysts to fear that shares may have gone too high, too fast.

After a flurry of activity at the start of trading and a large drop, the FTSE 100 rebounded slightly and was recently 61.80 points lower at 6,224.30.

In Japan, the Nikkei 225 share index closed down 515.8, or 2.9%, lower at 17,604.1, while in Hong Kong the Hang Seng index fell 496.36, or 2.5%, to 19,716.5.

More declines?

The question facing many investors is how far and how long the fall in prices will last and whether or not the bull run that has driven stocks and indexes higher has now broken.

"I see it as a correction within a bull market," said James Hong, head of equity derivatives trading at Dresdner Kleinwort.

"We were looking for some sort of correction overall. It is a little bit surprising to have it all happen at the same time."

Even if a market's upwards trend is not broken, a market correction can still be significant, analysts said.

In May last year, the UK's FTSE 100 lost more than 9% as concerns about high oil prices and political global instability combined to impact on world markets.

Wide impact

China has been one of the main emerging markets for many investors, and its main stock index had more than doubled in value during the past year.

At the same time, key indexes in Asia such as Japan's Nikkei 225 were pushing to their highest levels in seven years.

Some analysts fear the fall in share prices may last a number of weeks rather than days.

"This sort of move by the market is a little worrying, and it looks like it has been caused by a build-up of concerns in recent days," said Angus Campbell, a trader at Finspreads.

"Memories of last May's correction have sent shivers through investors' spines as many market participants have used futures contracts to run for cover."

The worries hammered China's Shanghai index by nearly 9% on Tuesday, giving it its worst day in a decade.

The China wobble rippled out across Europe on Tuesday, and hit the US later in the day where it coupled with disappointing economic figures to push the Dow Jones 3.3% lower by the close of trading.

Asian markets then picked up on this negative sentiment, and by early Wednesday India's Sensex fell more than 3.8%.

Australia's main stock index shed as much as 3.5% and at one point was trading at a five-week low, before closing down 2.7%.