Global stocks fell sharply as investors sold off shares

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Global stocks fell sharply Thursday as investors sold off shares and looked for safety in gold and bond markets. 

Major Wall Street indexes were down as much as two percent in Thursday's trading, fueled by a slide in bank shares, anxiety over a fresh drop in oil prices and a slowing global economy.  Adding to investor worries was the cautious tone taken this week by U.S. central bank chief Janet Yellen who told lawmakers on Capitol Hill that a weakened global economy and the continued volatility in financial markets could hurt U.S. economic growth.  Yellen said it was unlikely the Fed would cut its benchmark interest rates from the current level, but hinted at a slower pace of rate hikes this year.

Meantime, Britain's FTSE declined 2.4 percent, Germany's DAX fell 2.5 percent, and France's CAC lost four percent. 

Earlier, Hong Kong's Hang Seng plunged nearly 4 percent while South Korea's Kospi fell 2.9 percent, it's biggest single day drop in nearly four years. 

In currency markets, the U.S. dollar fell, hitting a 16 month low against the yen, while the euro rose. 

Benchmark U.S. crude saw further declines, down 56 cents Thursday to $26.86 a barrel, while Brent crude, the European standard, fell more than 30 cents to $30.53 cents a barrel in London.

Analysts expect the volatility will continue.  Market strategist Oliver Roth at Oddo Seydler Bank says the major worry is a crisis in the financial sector.     

"The banks are under pressure, especially the banking sector, so what we see is a huge pressure on the market. Investors are very nervous, especially about the banking sector, but also of course about the oil price, the low oil price and so on. So we have altogether a very negative scenario right now and the market is very nervous," Roth said.