Marketmen said investor sentiment got a further blow after US regulators seized the 119-year-old Washington Mutual, second largest savings and loan institution in US, and sold banking operations to JPMorgan Chase for 1.9 billlion dollars. On BSE, the 30-share Sensex closed the day at over two-month low of 13,102.18, a loss of 445 points, or 3.28 per cent, from its last close. The broader 50-share Nifty of the National Stock Exchange also tumbled by 125.30 points or 3.05 per cent to close at 3,985.25, a level last seen on July 16.
They said the failure of Washington Mutal, popularly knows as WaMu, added further to the deep worries of financial upheaval deepening even as US administration continued to debate on 700 billion-dollar rescue package, on which investors globally have pinned their hopes.
Asian and European indices plunged, which analysts attributed to political squabbling blocking a potential deal on a bailout package for the shattered US financial system.
Among the main Asian indices, Japan's Nikkei 225 and Hong Kong's Hang Seng were trading in the red. In Europe, London Stock Exchange's FTSE 100 index was down nearly two per cent at 5,098.41 points in the afternoon trade.
Reacting sharply to the Thursday night's developments in the US, Japanese market declined with Nikkei 225 falling one per cent while Hang Seng slipped by 1.33 per cent.