Global equities fell sharply and the dollar sank on Tuesday after US government plans to rescue ailing mortgage groups Freddie Mac and Fannie Mae left investors unconvinced.

The dollar declined to a new record low against the Euro boosted oil prices close to recent highs, while hopes of finding havens lifted gold to a four-month peak, and bond yields fell as investors piled into the safety of government paper reports the Financial Times.

”The impact of Sunday’s announcement by the Federal Reserve regarding its mortgage bail out plan for Fannie Mae & Freddie Mac remains somewhat derided in the market,” said James Hughes at CMC Markets. ”It has apparently done little more than underline the perilous state of the US economy.”

Wall Street initially welcomed the plans, but fears that equity investors will be overlooked in the rescue plan left US stock indices struggling by the close of Monday’s trade. The S&P 500 finished the session 0.9 per cent lower at 1,228.3.

Asian equity markets were battered as banking stocks tumbled across the region. India’s Sensex fell more than 4 per cent as ICICI Bank slid 8.5 per cent. Hong Kong’s Hang Seng index lost 3.8 per cent, with ICBC and China Construction Bank both down more than 4 per cent.

Read it here: Ailing sentiment hits dollar and global stocks