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Yellen inspires fresh rout on global stock markets

US Federal Reserve chair Janet Yellen testifies before the House Financial Services Committee in Washington, DC on February 10, 2016

World stocks slumped Thursday, gripped by another fierce sell-off after a warning by Federal Reserve boss Janet Yellen over the global economy, while oil fell close to 13-year lows.

New York's Dow Jones Industrial Average followed European exchanges lower, having already dropped the previous session as Yellen also played down the chances of another US interest rate hike any time soon.

The news sparked a renewed sell-off in Asia on Thursday, with Hong Kong stocks tumbling as investors played catch-up after a three-day break for the Chinese New Year.

The intense selling spilled over into Europe, with Athens shedding six percent and Milan diving five percent at one stage, while Paris was down more than 3 percent in the European mid-afternoon.

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Frankfurt and Madrid stocks also slid by more than three percent at one point, while London retreated 2.0 percent, before recovery somewhat in the afternoon.

- 'Panic on Europe's doorstep' -

"The Fed chair inspired a wave of panic late in the American session that has fed through Asia and turned up on Europe's doorstep," Spreadex analyst Connor Campbell told AFP.

He added that "a lack of sufficient dovishness paired with gloomy comments on the global outlook" had reignited investors' recession fears.

US oil prices dipped close to a 13-year low underneath $27 per barrel, plagued also by chronic oversupply.

French oil giant Total said Thursday it would slash investments by billions of euros (dollars) in 2016 in response to the weak oil price.

Sentiment soured further as Australian mining giant Rio Tinto posted an annual net loss of US$866 million (768 million euros) and blamed the "highly challenging environment" as commodity prices plunge and China's economic slowdown bites.

The dire result compared with a US$6.53 billion net profit in 2014.

The company also dumped its progressive dividend policy, in which shareholders are given gradually higher payouts.

That sent Rio Tinto's share price plunging 4.14 percent to 1,692 pence.

Swiss-based miner Glencore topped the fallers board in London after posting a 6.0-percent drop in fourth-quarter copper output.

Glencore shares plummeted 6.4 percent to 87.54 pence.

"Global growth concerns have left natural resources stocks languishing (with) Rio Tinto taking the biggest hit after announcing a change in dividend policy," noted analyst Tony Cross at traders TrustNet.

Back in Asia, Hong Kong stocks slumped almost four percent to their lowest levels since June 2012.

On the first trading day of the Year of the Monkey, Hong Kong also slid on concerns about riots in the city this week that saw police battle street sellers, injuring several people. Analysts said the clashes could harm tourism.

- Dollar hits 15-month yen low -

There were sharp losses on other Asian markets, with Seoul closing almost three percent down and Singapore off 0.8 percent, while Wellington also sank. However, Sydney rebounded on bargain-buying.

Tokyo, Shanghai and Taipei were all closed for public holidays.

The dollar sank heavily against the yen after Yellen's testimony to Congress, and tumbled further on Thursday to strike 110.99 yen -- the lowest since late October 2014.

While she made no explicit comments on the Fed's plans to lift rates -- after December's rise -- her description of clouds looming over the US economy was taken as a hint there will be no increase in the immediate future.

US benchmark West Texas Intermediate meanwhile slid Thursday to $26.52 per barrel, which was very close to the 12-year low of $26.19 hit on January 20.

- Banking jitters -

Banking stocks were also having another bad day, following wild swings since the start of the week.

Societe Generale, France's second-largest bank, warned it would fall short of its earnings targets this year, sending its shares more than 10 percent lower on the Paris exchange, as investors ignored a hefty rise in profits for 2015.

Worries about financials prompted the head of the Eurogroup, Jeroen Dijsselbloem, play down the concerns, saying that the EU's single currency area and its banks were stronger than a few years ago.

The welcome extended by the Frankfurt stock market to a rumoured bond buyback by Deutsche Bank also proved short-lived as the stock continued its rollercoaster ride, this time downwards, falling by more than 5 percent on Thursday.

- Key figures around 1500 GMT -

London - FTSE 100: DOWN 1.7 percent at 5,574.4 points

Frankfurt - DAX 30: DOWN 1.9 percent at 8,845.1

Paris - CAC 40: DOWN 2.9 percent at 3,945.58

Milan - FTSE MIB: DOWN 4.3 percent at 15,991.9

EURO STOXX 50: DOWN 2.8 percent at 2,711.1

New York - Dow: DOWN 1.4 percent at 15,688.1

Hong Kong - Hang Seng: DOWN 3.9 percent at 18,545.80 (close)

Tokyo - Nikkei 225: Closed for a public holiday

Euro/dollar: UP at $1.1331 from $1.1286 on Wednesday

Dollar/yen: DOWN at 112.44 yen from 113.40 yen