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LONDON — World stock markets staggered on Monday towards the end of their worst year since the global financial crisis a decade ago, rocked by rising interest rates, the global trade war and Brexit, dealers said.

London and Paris wobbled in holiday-shortened trade on New Year's Eve — but nursed dizzying double-digit annual falls after an exceptionally volatile 2018.

Hong Kong rose on Monday after US President Donald Trump hailed "big progress" on resolving Washington's trade war with Beijing, but was down almost 14 per cent over the year.

Equities have been hammered in 2018 by tighter monetary policy — from both the US Federal Reserve and also the European Central Bank, which halted its quantitative easing stimulus policy this month.

"Global stocks are set for their worst year since the financial crisis, thanks to the tightening monetary policies adopted by several central banks around the globe — especially the Federal Reserve and the ECB", said ThinkMarkets analyst Naeem Aslam. 

"The Fed stopped printing easy money a few years back and increased interest rates four times this year.”

"The ECB also ended its quantitative easing programme and there has been discussion on... normalising interest rates."

The Bank of England, meanwhile, hiked British interest rates in August for the second time since the financial crisis to help tame inflation, despite worries that Brexit could wreak havoc on the economy.

'America First' 

Sentiment was also slammed by US President Donald Trump's 'America First' trade policy which has sparked a damaging trade war with China and others.

Wall Street did however mark the longest-ever "bull market" in August, a run that began amid extraordinary crisis-era monetary policy — but for which Trump has claimed credit after his tax cuts and regulatory rollbacks.

Yet, markets have since spiralled lower on slowing global growth, Italy's fiscal woes, a US government shutdown and Trump's attacks on the Fed.

Investors also ran for cover as the uncertain nature of Britain's looming exit from the European Union in March 2019 casts a long shadow.

"Stock markets have been on a wild ride this year and the United States has been at the centre," Oanda analyst Craig Erlam told AFP.

"Tax reforms hugely boosted earnings, bringing an economic boost with it," he said.

However, "the trade war with China and skirmishes elsewhere have weighed heavily on the relevant domestic markets which has dented investor sentiment".

Washington and Beijing imposed tit-for-tat tariffs on more than $300 billion worth of goods in total two-way trade earlier this year, locking them in a conflict that has begun to eat into profits and contributed to stock market plunges.

While investors remain concerned, relations have thawed since Chinese President Xi Jinping and Trump agreed to a 90-day trade truce in early December while the two sides work to ease trade tensions by March 1.

Chinese state news agency Xinhua quoted Xi as telling Trump both leaders want "stable progress".

In Europe, on Monday, London's benchmark FTSE 100 index dipped 0.1 per cent to finish at 6,728.13 points, marking a sharp annual loss of 12.5 per cent.

The Paris CAC 40 climbed 1.1 per cent to end at 4,730.69 points — which was drop of nearly 11 per cent for the year.

Many investors were away for Christmas and New Year holidays, while trading hubs including Frankfurt, Rome, Tokyo, Shanghai and Seoul were shut.

Return to recession? 

"2018 has been characterised by a shift from low volatility, high liquidity and expectations of equity out-performance to high volatility, low liquidity and the return of a bear market in equities," said VTB Capital economist Neil MacKinnon.

"For 2019, a global economic slowdown — perhaps recession — looks increasingly likely," he warned.

Key Asian markets also limped towards the end of the year in bear market territory — meaning that they are 20 per cent below their most recent peaks.

Tokyo's benchmark Nikkei index had rounded out 2018 on Friday with its first annual loss since 2011, and Shanghai became the worst-performing major global stock market, dropping by nearly a quarter.

NEW YORK — The Japanese yen jumped on Friday as investors sought protection against volatile stock moves, while the greenback dipped as stocks traded higher after a dramatic week capped by large price swings. 

The benchmark S&P 500 tested its 20-month low early in the week and was at the brink of bear market territory before the three main indexes roared back with their biggest daily surge in nearly a decade on Wednesday and a late rally on Thursday.

The yen gained despite higher stocks, soft domestic data and a decline in benchmark Japanese bond yields, which fell back into negative territory for the first time in more than a year.

"That suggests that there's still demand for some insurance against extended volatility over the holiday period that's keeping the yen better supported," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

The Japanese currency was last up 0.66 per cent against the greenback at 110.26 yen. Another safe-haven currency, the Swiss franc, also jumped 0.82 per cent to 0.9794. 

"Markets are a bit more cautious on risk appetite, with the Japanese yen and the Swiss franc gaining," said Lee Hardman, an FX strategist at MUFG in London.

The dollar index, a gauge of the greenback against a basket of six major currencies, fell 0.22 per cent to 96.265.

The US currency has been hurt in recent weeks by rising expectations that the Federal Reserve will pause its tightening cycle sooner than expected, or risk harming the US economy with further interest rate increases.

A partial shutdown of the US federal government, trade tensions between the United States and China and complications relating to Britain's exit from the European Union are also keeping investors cautious.

"There's still a lot of potential risk and uncertainty out there," said Osborne.

Both chambers of the US Congress convened for only a few minutes late on Thursday, but took no steps to end the partial federal government shutdown before adjourning until next week.

FRANKFURT AM MAIN — The euro turns 20 on Tuesday, marking two tumultuous decades that saw the single currency survive a make-or-break crisis and become a fixture in financial markets and Europeans' wallets.

But it is destined to remain a fragile giant without closer eurozone integration, observers say.

Born on January 1, 1999, the euro initially existed only as a virtual currency used in accounting and financial transactions.

It became a physical reality for Europeans three years later, and its coins and notes are now used by over 340 million people in 19 European Union countries.

The currency was not immediately loved, with many perceiving its arrival as an unwelcome price hike. In Germany, it was nicknamed the "teuro", a pun on the German word for expensive.

But the ease of travelling and doing business across borders in the euro area without having to worry about foreign exchange fluctuations quickly won hearts and minds.

Today the euro is more popular than ever despite the rise of eurosceptic, populist movements in a slew of countries.

In a November survey for the European Central Bank (ECB), 74 per cent of eurozone citizens said the euro had been good for the EU, while 64 per cent said it had been good for their nation.

"The euro is anchored in the population, even anti-establishment parties have had to acknowledge that," said Nicolas Veron, a fellow at the Bruegel think tank in Brussels and the Peterson Institute for International Economics in Washington.

The euro is now the world's number-two currency, although it remains some way off from challenging the dominance of the US dollar.

'Whatever it takes' 

The euro reached a defining moment when the aftershocks of the 2008 financial crisis triggered a eurozone debt crisis that culminated in bailouts of several countries, pushing the currency union to breaking point and severely testing the club's unity.

Experts say the turbulent time exposed the original flaws of the euro project, including the lack of fiscal solidarity through the pooling of debt, investments and therefore risks, or the lack of a lender of last resort.

The turmoil also highlighted the economic disparity between member states, particularly between the more fiscally prudent north and debt-laden southern nations.

ECB chief Mario Draghi was credited with saving the euro in 2012 when he uttered the now legendary words that the Frankfurt institution, in charge of eurozone monetary policy, would do "whatever it takes" to preserve the currency.

The ECB promised to buy up, if necessary, unlimited amounts of government bonds from debt-stricken countries. The scheme, known as outright monetary transactions, succeeded in calming the waters but has never actually been used.

To keep money flowing across the eurozone and ward off the threat of deflation, a crippling downward spiral of prices and economic activity, the ECB has still taken unprecedented action in recent years.

It has set interest rates at historic lows, offered cheap loans to banks and bought more than 2.6 trillion euros ($3.0 trillion) in government and corporate bonds between 2015 and 2018.

With inflation inching closer to the bank's goal of just under 2 per cent, the stimulus has been widely judged as a monetary policy success story.

But observers say the 19 single currency nations have not done enough to carry out the political reforms necessary to better arm the region for future downturns and achieve greater economic convergence.

 'Feet of bricks' 

The long-mooted banking union remains incomplete, amid disagreement over the creation of a Europe-wide deposit insurance scheme.

French President Emmanuel Macron's flagship proposal for a eurozone budget has been considerably watered down, with members in December agreeing only to exploring a scaled-down version of the idea while staying vague on details.

Macron's more ambitious plans for a eurozone finance minister or a European version of the International Monetary Fund have been pushed aside.

The ECB, meanwhile, has gone "as far as it can" in shoring up the euro, said Gilles Moec, a former French central bank economist. 

But analyst Vernon took a more upbeat view, saying the euro had been strengthened by the clean-up of banks' balance sheets, efforts to rein in public debt and the ECB's extraordinary actions.

The euro is now "a giant with feet of bricks rather than clay", he said.

TOKYO — It's a rite of spring in Japan: Major corporations hire fresh university graduates en masse every April, starting them all at the same salary with assurances of rising pay and lifetime employment.

But lately, some companies, including Rakuten, SoftBank and Line Corp., are breaking with that tradition, signing up new employees with coveted technical skills months earlier — and paying them more than other new recruits.

As competition for workers grows in Japan's shrinking labour pool, traditional seniority and group dynamics are giving ground to the more individualised, merit-based employment system found in the West.

It is a welcome sign for Prime Minister Shinzo Abe's government and the central bank, which have been pushing for a more flexible labour market that would boost wages and revive consumption.

Takashi Murakami, a 23-year-old producer at Mercari, which developed a popular flea market app, says seniority-based pay and lifetime employment are relics.

"I'm grateful that the company seems to value me with pretty good pay," he said. "I already got a pay hike after joining the company, which motivated me to work even harder. Merit-based pay is more fitting to the times."

In recent years, Mercari said, it has been hiring college students throughout the year to grab workers with needed skills. The company even offers jobs to some second-year or third-year students.

Mercari also has a programme called "Mergrads" to provide internships and training to improve new graduates' skills.

Since April, it has started offering higher pay to some job candidates with skills in information technology engineering and computer programming, said Ayano Okuda of Mercari, who is in charge of hiring new graduates. She declined to discuss the company's pay scale.

"The competition is surely heating up," she said. "We judge each individual's ability and offer them attractive salaries reflecting their skills." 

Mass hiring 

For decades, Japan's traditional spring hirings underpinned the economy and provided a clear corporate and social ladder, grounded in — and reinforcing — the cultural emphasis on loyalty and conformity.

Under Japan's often choreographed business practices, the Keidanren, the largest business lobby, had a "voluntary" timetable that many companies followed: Start recruiting new employees on March 1, begin job interviews with fourth-year students on June 1 and informally offer jobs on October 1 ­ six months before graduation.

Labour ministry data show the entry-level salary stands at about 200,000 yen ($1,775) a month, compared with roughly 30,000 yen in 1968, or 130,000 yen in today's money. 

Demand for workers is stronger now than it has been in decades; there are 1.62 jobs available per applicant, nearly a 44-year high.

In response, the Keidanren decided to ditch its timetable guidelines by spring 2021, meaning member companies are expected to follow them until then.

But more companies, particularly in "new economy" industries such as technology and e-commerce, have adopted much more flexible hiring practices, including offering select employees higher pay.

Disparity 

Internet advertising firm CyberAgent Inc. scrapped its uniform starting pay scale in April.

Now it offers annual starting salaries ranging from 4.5 million yen ($40,000) to 7.2 million yen ($64,000) or more for IT engineers, who account for about 40 per cent of its 5,000-person workforce. 

"We face stiff competition in securing able workers," said Yuko Ishida of CyberAgent.

That means some young, incoming employees are paid more than their older co-workers. CyberAgent pays exclusively based on ability without taking seniority into account, Ishida said.

"Our competitors are also offering better salaries for high-quality workers, so we believe we can attract able workers by offering appropriate salaries," she said.

Although some say Japan is long overdue for a shift toward a more flexible, merit-based employment system, it could upset long-standing social order.

"If it spreads throughout corporate Japan, it would mean a collapse of Japan's employment system," said Hisashi Yamada, a senior economist at Japan Research Institute and an expert on labour issues.

"That would cause a disparity among workers, causing uneven distribution of work and loss of motivation among those who feel left behind," he said.

TOKYO — Asian stock markets retreated again on Wednesday, extending a rout that began last week as US political uncertainty exacerbated worries over slowing global economic growth.

Investors were unnerved by the US federal government partial shutdown and President Donald Trump's hostile stance towards the Federal Reserve chairman. 

US Treasury Secretary Steven Mnuchin had also raised market concerns by convening a crisis group amid the pullback in stocks.

S&P 500 emini futures were last down 0.6 per cent, pointing towards a lower start for Wall Street when the US market reopens after Christmas Day, when many of the world's financial markets were shut.

Markets in Britain, Germany and France will remain closed on Wednesday.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.5 per cent, brushing a two-month low.

The Shanghai Composite Index lost 0.4 per cent while South Korea's KOSPI shed 1.6 per cent.

Japan's Nikkei, which slumped 5 per cent the previous day, had a volatile session. It swerved in and out of the red, falling more than 1 per cent to a 20-month-low at one stage, before ending the day with a gain of 0.9 per cent. 

"In addition to concerns towards the US economy, the markets are now having to grapple with growing turmoil in the White House which has raised political risk ahead of the year-end," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

US stocks have dropped sharply in recent weeks on concerns over weaker economic growth. Trump has largely laid the blame for economic headwinds on the Fed, openly criticizing its chairman, Jerome Powell, whom he appointed.

That has further rattled investors as they grappled with fears of slowing global growth, corporate earnings and US -China trade tensions.

In an effort to reassure investors, Treasury Secretary Mnuchin spoke on Sunday with the heads of the six largest US banks, who confirmed they have enough liquidity to continue lending and that "the markets continue to function properly".

"In the end, we believe that the Fed is the only presence capable of ending the current confusion in the markets," Kenta Inoue, senior market economist at Mitsubishi UFJ Morgan Stanley Securities, said in a note.

"The White House will probably keep making gestures intended to halt the rout in stocks, but the federal government is likely to remain shut into the new year. The US-China trade war also shows no signs of a resolution."

US bond yields have declined amid the rout, including a steep sell-off in oil, prompted investors to move into safe-haven government debt, adding to the growing pressure on the dollar.

The dollar traded at 110.35 yen after retreating to a four-month low of 110.00 overnight against its Japanese peer, which tends to attract demand as a perceived safe-haven during times of market volatility and economic stress.

The euro was 0.15 per cent higher at $1.1412.

The 10-year US Treasury note yield extended its fall to touch 2.722 per cent, its lowest since early April.

In commodities, US crude futures were up 0.4 per cent at $42.70 per barrel after tumbling 6.7 per cent on Monday.

US crude futures plunged to the lowest level since June 2017 on Monday, as bearish stocks added to fears of an economic slowdown.

Brent crude futures were down 0.18 per cent at $50.38 a barrel, having skidded 6.2 per cent in the previous session to their weakest since August 2017.

Safe-haven gold was well bid, with spot prices brushing a six-month peak of $1,272.83 per ounce.

BERLIN/MADRID — Models testing fashion brands like Adidas, Benetton and Gap are finding that almost a third of the shoes and clothes they try on are bigger or smaller than the size on the label indicates, explaining why many clothes bought online are sent back.

Calculating sizes more accurately could help online retailers like Germany’s Zalando and Britain’s ASOS cut costly returns and improve customer satisfaction.

“If you try on the same brand in a different colour it is sometimes a different size,” Zalando fitting model Savina Bellotto said as she squeezed a foot into a stiletto shoe with a shiny silver buckle that dug into her ankle.

Discounting to shift stock means fashion retailers are struggling to preserve profit margins, and ASOS’s warning on Monday of a major downturn caused retail shares to tumble.

Targeting returns, fast fashion firms like Zara and H&M have introduced software that suggests sizes for online customers. Customers type in height and weight, which are processed alongside historic data on purchases and returns.

“It’s a big burden for the retailer,” said Nivindya Sharma, director of retail strategy at trend forecaster WGSN. “Free returns started off as being a competitive advantage but now they’re the norm.” 

Fast fashion 

Around half of Americans expect to return clothes ordered online this holiday season due to poor fit, according to a survey by technology firm BodyBlock.

“Returns cost you a fortune. Firstly, you’ve got an unhappy customer, but also you’ve got the re-processing and putting it back into stock,” said Charlotte Kula-Przezwanski, a partner at Columbus Consulting, which specialises in retail processes.

To crack the sizing problem, Zalando, Europe’s biggest online-only fashion retailer, told Reuters it was augmenting the data it gathers online with feedback from models who check new styles.

“If we can put an article on a fitting model, just before or as an article is online, we immediately know there is a fitting problem,” said Zalando’s Director of Engineering Stacia Carr, adding that models flag about 30 per cent of stock as too big or too small.

Returns are a major issue for Zalando as about half the products it sells are sent back. A tradition of catalogue shopping with free returns means customers in its German home market are comfortable sending back unwanted goods. 

Problems with processing returns contributed to a third-quarter loss that prompted a sell-off in Zalando shares and sparked speculation it could be a takeover target for Chinese e-commerce giants like Alibaba or JD.com.

Zalando co-CEO Rubin Ritter said in November the problems with processing returns had been resolved and the company was taking steps to increase the profitability of smaller orders such as making size recommendations to reduce returns.

A change in fabric or design can have a big impact, Carr said, noting that size-related returns soared recently for one major denim brand after it adjusted its design. When Zalando flagged the issue, it changed back.

“In this era of turning around articles very quickly, the corners that get cut sometimes impact the fit of the garment,” she said.

Zalando’s small team of models initially tested shoes, but now they try on clothes too. Dresses, its top selling category, also have the highest rate of returns.

Models try on up to 120 shoes a day, measuring the inside with a special ruler and noting how each fits at heel, ankle and toes, while also looking for strong smells or quality issues. 

“It is very subjective. That is why we get the average between three models,” said model Gerard Nieto, as he measured a fleece-lined leather lace-up boot.

Cracking the sizing challenge is like solving a Rubik’s cube, because there are so many variables, Carr said.

“We know the Nordics like things more loose and oversized. The further south you go, it’s a tighter fit, the bodies are different,” she said. “We’ve all been surprised that we’ve been able to put a dent in this because it is such a complex topic.”

A rise in returns is an inevitable part of the e-commerce boom, retailers say.

“There’s a growing trend in return rates globally as the market matures,” said Roger Graell, director of e-commerce at Spain’s Mango, which expects to make at least one-fifth of sales online by 2020.

“What we hope to do with technology is make that growth rate slower.”

Mango uses sizing tools powered by Berlin-based software firm Fit Analytics, which was launched eight years ago and works with more than 200 companies — including ASOS, Tommy Hilfiger, Calvin Klein and Hugo Boss — across 95 countries. 

Fit Analytics has more than doubled revenue every year over the past three years, says CEO Sebastian Schulze.

“Margins are under pressure across the industry, you have to make sure people buy several times otherwise you don’t make money,” said Schulze. 

“If the fit isn’t right, customers will walk.”

HONG KONG- Asian stocks were mixed Monday after a weekend call by Treasury Secretary Steven Mnuchin to top US banking executives aimed at stemming the market panic which resulted in Wall Street experiencing its worst week in a decade.

The Dow and the Nasdaq ended Friday with their biggest weekly drop since the start of the global financial crisis as investors took fright over a government shutdown in Washington, President Donald Trump's public feuding with the Federal Reserve and the US-China trade war returning to the forefront.

Tokyo was closed for a public holiday on Monday but Hong Kong dropped 0.40 percent in a pre-Christmas half day of trading while Sydney closed up 0.48 percent. Shanghai was trading up in afternoon trade while Seoul slipped.

The mixed regional bag came after Mnuchin spent much of the weekend in damage control mode following multiple media outlets reporting that Trump had privately asked cabinet members if he has the authority to fire Fed Chairman Jerome Powell.
Last week, the central bank hiked rates, infuriating Trump who has ignored the traditional respect for the Fed's independence, calling it "crazy", "out of control" and a greater economic threat than China.

Mnuchin denied the reports of Trump seeking Powell's scalp, tweeting on Saturday that the president told him: "I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so."

The following day, Mnuchin announced he had called senior executives from six of the largest American banks to discuss the market turmoil and received assurances.

"The banks all confirmed ample liquidity is available for lending to consumer and business markets," the Treasury said in a statement attached to a tweet from Mnuchin announcing the calls.

"We continue to see strong economic growth in the US economy with robust activity from consumers and business," Mnuchin was quoted in the statement as saying, adding that he would convene a call with the President's Working Group on financial markets later Monday.

 'More panic and fear'

Analysts expressed both surprise and alarm at Mnuchin's Sunday statement, saying it might do the opposite of calming current jitters.

"Nothing says don't panic like saying 'I'm calling the plunge protection team tomorrow'," Michael O'Rourke, JonesTrading's chief market strategist, told Bloomberg News.

"I honestly think that's the type of event that's going to startle markets and create more panic and fear when it's meant to create confidence."

Last week's turmoil in Washington -- which included a government shutdown that appears likely to last until at least Thursday and the abrupt resignation of Defense Secretary Jim Mattis -- has spooked markets worldwide.

Japan's Nikkei hit a fresh 15-month low on Friday with its fourth consecutive day of losses, joining the tech-rich Nasdaq in bear territory. European bourses were flat or rising slightly.

Oil inched higher in Asian trade after crude-producing nations said they expect prices will arrest their recent slide and rebalance early next year, when a deal on new production cuts takes effect.

However, analysts said prospects for a global economic slowdown in the coming year -- which would weaken crude demand -- and rising US shale output are dampening sentiment and limiting any rebound from the current 15-month lows.
Prices have plunged by around 40 percent from four-year peaks reached in early October on concerns about oversupply and weaker demand.

In foreign exchange markets, the yen rose 0.1 percent to 111.10 per dollar, the euro was up 0.2 percent at $1.1390 and the pound was at $1.2662, a 0.1 percent rise.

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KUWAIT CITY — Oil ministers from the leading member states of the Organisation of Petroleum exporting Countries (OPEC) said on Sunday they expect prices will arrest their recent slide and rebalance early next year, when a deal on new production cuts takes effect.

Oil prices have shed more than 36 per cent since early October to trade at $54 per barrel, due to fears of oversupply and weak global demand.

But President of OPEC and UAE Energy Minister Suhail Al Mazrouei said that the surplus in the oil market was small compared to 2017 and expected it to vanish in one or two months. 

"Based on available figures, we have around 26 million barrels of surplus... compared to 340 million barrels in early 2017," Mazrouei told a press conference in Kuwait City.

"I think that we can easily do with this surplus and reach market rebalance in one or two months... in the first quarter of next year," he said.

OPEC — a cartel of producer countries that has long manipulated output of the commodity to influence global prices in members' favour — and non-OPEC members agreed in early December to trim production by 1.2 million barrels a day from January 1, in a bid to shore up sagging prices.

Mazrouei said that there has been higher than anticipated supply on the market in recent months, as US sanctions on Iran have had a less pronounced effect on the country's oil exports than had been expected.

Iraq's Oil Minister Thamer Al Ghadban said that there is a consensus among OPEC and non-OPEC producers to comply with the new agreement to trim output in a bid to stabilise the market.

He said the new agreement is valid for six months and the ministers will meet in April to assess the impact of the cuts.

Ghadban said he believes that the new measures taken by producers will "stop the slide in oil prices".

Mazrouei said that producers are ready to renew the agreement or increase cuts in case the market does not balance.

"If the production cuts of 1.2 million barrels a day is not enough, we will meet again to see what is enough and apply it," he said.

During their meeting next April, the producers are also expected to sign a long-term agreement to formalise cooperation between OPEC and non-OPEC members over oil output. 

OPEC has lately been cooperating closely with Russia and other non-cartel producers, in a bid to impose greater control over global output and prices. 

LONDON, England — London's Gatwick Airport reopened on Friday after a mystery saboteur wrought 36 hours of travel chaos for more than 100,000 Christmas travellers by using drones to play cat-and-mouse with police snipers and the army.

Sussex police made two arrests late on Friday in connection with the disruption and urged the public and passengers around the airport to remain vigilant. 

After the biggest disruption at Gatwick since an Icelandic volcanic ash cloud in 2010, the airport had said around 700 planes would take off on Friday, although there would still be delays and cancellations.

Gatwick, Britain's second busiest airport, briefly closed again on Friday to investigate a new drone sighting but was soon operating as normal.

"Flights have resumed," a spokeswoman said. "The military measures we have in place at the airport have provided us with reassurance necessary to re-open our airfield."

Britain deployed unidentified military technology to guard the airport against what transport minister Chris Grayling said were thought to be several drones. "This kind of incident is unprecedented anywhere in the world," he said. 

The motivation of the drone operator, or operators, was unclear. Police said there was nothing to suggest the crippling of one of Europe's busiest airports was a terrorist attack.

Gatwick's drone nightmare is thought to be the most disruptive yet at a major airport and indicates a new vulnerability that will be scrutinised by security forces and airport operators across the world.

The army and police snipers were called in to hunt down the drones, thought to be industrial-style craft, which flew near the airport every time authorities tried to reopen it on Thursday.

No group has claimed responsibility publicly and police said there was no evidence another state was involved.

Sussex Police Assistant Chief Constable Steve Barry said they were keeping an open mind about who was responsible. 

"In terms of the motivation, there's a whole spectrum of possibilities, from the really high-end criminal behaviour that we've seen, all the way down to potentially, just individuals trying to be malicious, trying to disrupt the airport," he said.

After a boom in sales, unmanned aerial vehicles have become a growing menace at airports across the world. In Britain, the number of near misses between private drones and aircraft more than tripled between 2015 and 2017, with 92 incidents recorded last year.

Thermal imaging? 

The British Airline Pilots' Association (BALPA) said it understood "detection and tracking equipment" had been installed around Gatwick's perimeter. 

BALPA said that it was extremely concerned at the risk of a drone collision. Flying drones within 1 km of a British airport boundary is punishable by five years in prison.

The defence ministry refused to comment on what technology was deployed but drone experts said airports needed to deploy specialist radar reinforced by thermal imaging technology to detect such unmanned flying vehicles.

Other ways to tackle them is typically by frequency jamming that can disable or disrupt control signals and the GPS signals that allow the drones to navigate.

The Telegraph newspaper had reported earlier that the perpetrator had circled the drone around the airport building and flashed its lights. A description of the drone by witnesses had enabled experts to determine the model of the machine, according to the report.

The drone sightings caused misery for travellers, many sleeping on the airport floor as they searched for alternative routes to holidays and Christmas family gatherings.

Flights were halted at 21:03 GMT on Wednesday after two drones were spotted near the airport. The disruption affected at least 120,000 people on Wednesday and Thursday but flights were restarted at 06:14 GMT on Friday.

At 17:40 GMT flights were suspended again but restarted less than an hour later.

It was not immediately clear what the financial impact would be on the main airlines operating from Gatwick including easyJet , British Airways and Norwegian.

Britain's Civil Aviation Authority said it considered the event to be an "extraordinary circumstance" meaning airlines are not obliged to pay compensation to affected passengers. 

Airlines will have to refund customers who no longer wish to travel, however, and try to reschedule flights to get passengers to their destinations.

Some airport staff handed out chocolate and Christmas elf toys to stranded passengers.

Some, like Sarah Garghan-Watson, chose to stick it out at the airport overnight, having arrived at 8am on Thursday.

"It's now 2 o'clock in the morning at Gatwick, and it's very bright and very noisy. It's now also very cold," she said in a video shown on Sky.

"All I can see tonight... is a sign that says 'no more sleeps until the beach'. And here we are, sleeping, in the stairs at Gatwick, because there's no flights."