Read our markets wrap here Mehreen Khan writes: Panic-stricken investors sought out the shelter of haven assets as world markets were gripped by another day of trading tumult on Thursday. Money poured into the safest government debt, pushing down borrowing costs in Britain to their lowest recorded levels, and sparking demand for gold as global equities finished in the red for the fourth consecutive day of trading. In the UK, the benchmark yield on 10-year gilts dropped to 1.226pc - their lowest point since records began in the 17th century. Returns on US treasury bonds also plummeted to their lowest since the start of 2015. Analysts warned that markets were in the grip of a “self-reinforcing death spiral” driven by anxiety that the world’s central banks were losing their fight against insipid inflation despite resorting to an eight-year stretch of unprecedented stimulus measures. These fears were crystallised by the Swedish central bank’s shock move to slash its main interest rate to -0.5pc on Thursday. The Riksbank, which has been on a relentless drive to push down its currency, said the measures were necessary to stoke growth and inflation, but admitted they would trigger retaliatory moves by rival central banks in a global race to the bottom. The Swedish rate cut sent ripples across global equity markets. Britain’s FTSE 100 saw another £35bn wiped off its value, as it finished the day at a three-and-half year low at 5,536. The UK’s benchmark index has now bled £80bn this week. It was followed in the red by France’s CAC40 and Germany’s DAX index which both declined 4.1pc and 2.2pc respectively. Europe’s embattled banks were in the eye of the selling storm yet again, falling by another 6.5pc. The Euro Stoxx 600 index of leading banks is languishing at levels last seen at the height of the eurozone’s debt crisis in August 2012 and has lost a third of its value since the start of the year. France’s Societe Generale was the biggest casualty of the sell-off, losing more than 13pc after missing its profits target for the fourth quarter. Soc Gen’s woes highlighted the threat of negative interest rates crimping bank profitability, as lenders are penalised for parking reserves at the central banks. In the US, investment bank giants Citigroup and Bank of America both fell by more than 6pc in early day trading helping to push the Dow Jones Industrial Index down by 300 points. “Markets really have not discovered anything about banks over the past three months they didn’t know before” said Marchel Alexandrovich at Jefferies. “What is really happening is that the markets have stopped believing central banks can generate inflation”. “This becomes a self-reinforcing death spiral: markets are pricing in lower and lower future inflation this pushes up real interest rates, monetary conditions become tighter, which means future growth and inflation gets downgraded”. Amid the stock rout, gold rallied to its highest level since February 2015 to as high as $1,263.90 an ounce. Gold is now nearing the technical definition of a bull market, having risen by nearly 20pc since hitting lows in 2014, making it the best performing commodity of the year. Financial markets now expect the Bank of England to cut interest rates later this year, while the European Central Bank is walking a perilous tight rope between slashing interest rates further – escalating fears over the health of banks – or ramping up its politically contentious quantitative easing programme. “We've relied on central bankers to fix all the world's woes, when all they could really do was to get the global financial system back on an even keel” said Kit Juckes at Societe Generale. Full report here