Frankfurt - European shares plunged about 5 per cent in early trading Thursday after recession fears wiped out the big gains in stock prices run up earlier this week in New York and across Asia.

Europe's blue-chip Stoxx50 dived by 5.4 per cent to 2,129 shortly after opening as new gloomy US data helped fuel concerns about the prospects of a protracted and deep recession.

London's FTSE index slumped by 5.17 per cent as the trading got under way in Europe's premier stock market.

This was reflected across national bourses with Frankfurt's DAX index sinking 4.8 per cent and Paris' CAC dropping 5 per cent as the optimism earlier this week generated by global government action to address the crisis vanished.

Adding to the signs that renewed recession fears were driving share markets, the oil price continued to fall on expectations of a drop in demand as the global economy enters a sharp slowdown.

In early European trading Thursday, oil had 3.9 per cent to 71.90 dollars a barrel. (dpa)