Global Markets Lose $2 Trillion As 'Brexit' Raises Economic Fears

Global stock markets lost $2 trillion in value in the wake of a decision by British voters to leave the European Union.

Global stock markets have lost about $2 trillion in value after Britain voted to leave the European Union, a move which is expected to slow world growth and keep markets on edge.

With stock markets worldwide losing near 5 percent of their value on average, U.S. President Barack Obama and other world leaders sought to assure investors and businesses that they will keep the global economy on an even keel despite the shock the unexpected vote for so-called "Brexit" will have on the world's largest trading bloc.

"I'm confident that the U.K. is committed to an orderly transition out of the EU," said Obama after speaking by phone with British Prime Minister David Cameron and German Chancellor Angela Merkel after the close of markets on June 24.

He vowed that the United States and Britain would "stay focused on ensuring economic growth and financial stability."

The U.S. Federal Reserve, Bank of England, European Central Bank, and People's Bank of China all said they were ready to provide liquidity if needed to ensure global market stability.

The U.S. central bank is now no longer expected to keep raising interest rates this year, as Fed leaders had previously warned that Brexit would pose a major risk for the U.S. and global economic expansions.

Global investors were largely blindsided by the vote, with most having bet on Britain staying in the EU, as opinion polls conducted in Britain just before the vote had forecast.

The result was a particularly sharp global selloff. No market was left untouched, from Moscow to Shanghai. MSCI's all-country world stock index fell by 4.8 percent.

Mainland European stock markets took the brunt of selling as investors feared the vote could destabilize the soon-to-be 27-member bloc by prompting more referendums.

Frankfurt and Paris each fell 7 percent to 8 percent. Italian and Spanish markets posted their sharpest one-day drops ever, falling more than 12 percent, led by a dive in European bank stocks. Italy's Unicredit fell 24 percent while Spain's Banco Santander fell 20 percent.

London's FTSE plunged 8 percent at the open of trade, but pared its losses and ended down 3.2 percent as investors wagered that a steep 9 percent drop in the British pound to a 31-year low could benefit Britain's economy.

U.S. markets had their worst day in 10 months and gave up all their gains for the year. Major Wall Street indexes lost from 3.5 percent to 4 percent of their value.

"The vote is creating a tremendous amount of uncertainty. Uncertainty often freezes expansion decisions" by businesses and investors, said James Chessen, chief economist at the American Bankers Association. "It means that the global economy will grow more slowly,"

The losses in some places were larger than any since the global economic crisis of 2008-09. Tokyo's Nikkei had its worst fall since 2011, down 7.9 percent. MSCI's broadest index of Asia-Pacific shares outside Japan slid almost 3.4 percent.

Worries about a major slowdown in global growth sent oil prices plummeting by 5 percent. The pound suffered a breathtaking collapse against the U.S. dollar, and the euro also plunged, dropping by 2.6 percent.

Emerging market currencies across Asia and Eastern Europe buckled on fears that investors could pull out.

Meanwhile, safe-haven investments like gold and U.S. and German bonds soared as investors fled out of stock and currency markets.

With reporting by Reuters, AP, AFP, and dpa