Script:
Fear once again took hold, starting in Asia, following on into Europe. Even after Tuesday's strong showing, Europe opened sharply lower, when the credit crunch spread beyond a few US specialty mortgage funds. With an Australian Bank warning some of its investors might lose money, people seem no longer willing to risk the gains they made earlier in the year.

I think at the moment, we are trading on fear. We are looking into the abyss, and you know, the worst fear is that this spreads, and instead of being a US housing market problem, it becomes a credit cycle problem and the trigger for a weaker global growth.

The panic began in the US mortgage markets last month, when complex trades in mortgages tied to people with poor credits started to falter. This has caused the collapse of some hedge funds. The bottom line is if this leads to the cost of credit or loans going up for companies, firms have to pay more to do business, especially in the mergers and acquisition field. And M&A has been driving much of the recent froth and the long bull markets.

That the US stock market in particular has been going up for more than four and a half years now, in Europe we've been rising slightly less than four and a half years, but it gained fairly steady gains. As we know, no market, um, goes up forever.

Wednesday's early falls in Europe came on the first day of the trading month, a month that is usually the quietest of the year. But thin volumes can exaggerate big swings in the market, so it may be a few holidays are cancelled or curtailed this August.

I think it's hard to say the blackberry of the bear minimum is going to be in much use around the holiday resorts of Europe and United States. August could set the tone for the rest of the year, and it started out on shaky ground.

European markets did begin to pare their losses around lunchtime. But in these days of sharp swings, heavy volumes, and uncertainty of whether this is just a blip or the beginning of a bear market. Volatility is expected to continue throughout August. Jim Boulden , CNN, London.

Notes:

M&A: Merger and Aquisition
Hedge fund: A hedge fund is a private investment fund charging a performance fee and typically open to only a limited number of investors