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FTSE is expected to fall by more than 100 points as traders react to S&P’s downgrading of the US AAA credit rating, and the latest efforts to hold the Eurozone together 7.44am: Japan’s stock market has now closed after a pretty nervy session, but one where we didn’t see a full-blown panic. The Nikkei ended 2.18% lower at 9,097.56, down 202.32 points, having been as low as 9,057.29 at one stage. “The three main concerns are S&P’s downgrade of the U.S. debt rating, the ongoing European debt problems and inflation worries in China,” Masanaga Kono, chief strategist at Amundi Japan, told Reuters. Most Asian markets are still trading, and they are all suffering losses . China’s Shanghai Composite is down by over 4%. We’ll do a full round-up of the Asian markets once they’ve closed – they’ve already helped to set the mood in Europe…. 7.25am: The ECB’s pledge to start buying government bonds to prevent the crisis spreading further appears to be having an effect. My colleague Alex Hawkes has more details: Both Italy and Spain’s borrowing costs have dropped this morning, following indications from the European Central Bank that it would start buying the countries’ bonds to settle the markets. Yields on ten-year Italian bonds are down by almost half a percentage point to 5.6%, while Spanish bond yields have fallen 0.3 percentage points, to 5.7%. Traders suggested the move could be temporary, but any suggestion that Eurozone debts could be more manageable will help to limit the panic when the markets open at 8am. 7.18am: The Russian stock market has opened, and the main index promptly fell 3.5%. The 61 point fall to 1736 points pushed the RTS index to its lowest level for the year. More evidence that the shockwaves from the loss of America’s AAA credit rating (with S&P, anyway) are being felt worldwide. 7.12am: The dash for safety has sent gold racing to yet another record high – with the cost of an ounce of bullion leaping by over $50 this morning to $1,715. That’s a 3% increase. Tellingly, gold has hit a record high on 11 of the last 19 trading days, according to data from Reuters. Back in late January, an ounce was changing hands for just over $1,300. While some analysts argue that gold is a bubble ripe for popping, goldbugs insisted that the precious metal is only moving in one direction. Next stop – $2000 per ounce, argues Dominic Schnider , executive director for wealth management research at UBS. What people are realizing is that dollar and euro currencies have real problems and I think that’s manifesting in the gold price. I would say the way things evolve right now I really could even imagine $2,000 being in the cards. 6.51am: Stock markets across Asia were the first to react to the situation, and in many countries the verdict was stark. In South Korea, some trading was suspended after the main index – the Korea Composite Stock Price Index (KOSPI) – plunged by 7.4%. Japan’s Nikkei hit a five-month low and is down over 2% in late trading, led by banks and exporters. The losses were across-the-board: the New Zealand and Australian stock markets also slid by at least 2%. Hong Kong’s Hang Seng Index lost 4% at one stage, with the Shanghai Composite Index down by 3.7%. 6.45am: Europe’s major stock markets open at 8am BST. IG index is calling the FTSE 100 index down 117 at 5130 – a fall of around 2.2%. Losses on other markets may be less dramatic. The German DAX is being called down 55 at 6181 and the French CAC down 34 at 3244. Here’s more from IG’s Cameron Peacock : Despite US Treasury attempts to discredit the S&P downgrade that was served up on Friday night as a bitter finish to a disastrous week for equity markets, the bears are set to attack once again as Europe’s trade gets underway. Add this to the mounting sense of panic over the eurozone debt crisis with emergency talks being held amongst finance ministers over the weekend and there’s little reason to be cheerful. As a result, Asian markets are struggling already but despite the shadow this is casting over sentiment, the fact remains that equities are now generally trading at such a discount that even if there’s more downside to come, this stage of the sell-off must soon be set to run out of steam. 6.30am: “There’s a crisis of confidence across the financial world”. That’s the message from Bloomberg TV this morning as traders arrive at City trading floors for the first time since Standard & Poor’s downgraded America’s credit rating . Investors are also gripped by the latest developments in Europe’s debt crisis. Late on Sunday night the European Central Bank pledged ‘decisive action’ to save the euro – and is expected to start buying Spanish and Italian government bonds today. Asian markets have already fallen sharply, amid fears of a new global recession. Traders are predicting that the FTSE will fall by more than one hundred points when trading begins – adding to last week’s heavy losses. We’ll bring you the latest action from the City and beyond, as the financial crisis threatens to enter a new phase. Market turmoil Financial crisis Stock markets Economics Europe European Central Bank Euro Economic policy US economy Graeme Wearden guardian.co.uk