‘Dr Doom’ warns of a new markets nosedive

Nouriel Roubini, dubbed Dr Doom after he predicted the financial crisis, today warned stock and commodity markets will fall as the slow pace of recovery disappoints investors.

"Markets have gone up too much, too soon, too fast," said the New York University professor. "I see the risk of a correction, especially when the markets realise the recovery is not rapid and V-shaped, but more like U-shaped. That might be in the fourth quarter or the first quarter of next year."

Stocks have surged around the world in the past six months as evidence mounts that the global economy is emerging from its deepest recession since the Thirties.

The FTSE 100 index climbed as high as 5173 last month having slumped as low as 3512 in March.

"The real economy is barely recovering while markets are going this way," said Roubini. "Eventually markets are going to flatten out and correct to valuations that are justified.

"I see a growing gap between what markets are doing and the weaker real economic activities."

The International Monetary Fund predicts the global economy will expand by 3.1% in 2010 led by growth in Asia after a 1.1% contraction this year.

Roubini said that is still "anaemic" and "very weak".

Stock markets took a battering at the end of last week after a shocking surge in unemployment.