It was another terrible day for investors on Wall Street with US stocks falling sharply, wiping out the year's gains for the benchmark S&P500 on renewed credit market worries brought on by Countrywide Financial.

Before the bottom fell out of the market, positive inflation news initially buoyed investor sentiment. The Labor Department's Consumer Price Index showed an overall prices increase for goods of 0.1 per cent in July, down from a 0.2 per cent rise the previous month. The core CPI which strips out food and energy costs rose by 0.2 per cent, in-line with forecasts and the same increase as in June.

Meanwhile, a Federal Reserve report indicated industrial output rose by 0.3 per cent in July as a rise in automotive related production offset a decline in utility output