(Reuters)Turbulence tore through global markets on Thursday as investors sought the safety of Japanese yen, gold and top-rated bonds while dumping U.S. dollars on bets the Federal Reserve could be done with raising interest rates.

Stocks are tumbling

Even the absence of Tokyo for a holiday could not stop the dollar from hitting a 15-month low on the yen, and gold finally broke major chart resistance to reach its highest since May as a wave of risk aversion swept through trading floors. The aversion to risk helped lift gold  as far as $1,217.00 an ounce, clearing stiff resistance around $1,200.

In the midst of the turmoil, oil prices resumed their decline as U.S. crude  slid 70 cents to $26.77 a barrel, while Brent futures  lost 33 cents to $30.50.

Europe got off to a torrid start, with Britain’s FTSE 100  down 2.3 percent, Germany’s DAX  2.4 percent lower, France’s CAC 40  down 2.8 percent and U.S. futures also pointing to 1 percent drop for Wall Street ESc1 later.

Sweden’s crown  and government bond yields  were sent tumbling as its central bank delivered a surprise cut to its already deeply negative interest rates.

Insatiable demand for U.S. Treasuries drove longer-term yields to almost three-year lows and flattened the yield curve in a way that has presaged economic recession in the past.

Benchmark European German Bund yields dropped like a stone and UK yields hit an all-time low too, as riskier Spanish , Italian  and Portuguese  bonds moved in the opposite direction.

The euro zone’s finance ministers are set to meet later with worries creeping back in about Portugal and Greece’s ability to stick to the terms of their bailouts again.

“What this shows is that the risk-off mode has come back very quickly and that the worst may still be to come in these markets,” said Rabobank European strategist Emile Cardon.

“What is different to previous times is that the bad news in now coming from everywhere, China, Portugal the U.S. the commodity sector the banking sector. It’s like several smaller crises could combine into one big crisis.”

The flight from risk told on most Asian shares, with Hong Kong – a favourite channel for global investors to play China – diving 4.2 percent as investors there returned from the long Lunar New year holidays. Mainland China markets are closed all week.

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 1.4 percent, and South Korea  resumed with a 2.9 percent drop.

Wall Street had ended Wednesday mixed after Fed Chair Janet Yellen sounded optimistic on the U.S. economy, but acknowledged risks from market turmoil and a slowdown in China.

Analysts took that to mean a hike in March was unlikely, but further tightening remained possible later in the year.

Janet Yellen, US Federal Reserve chair

“Yellen made it clear that while the Fed still expects to continue on its gradual tightening path, policy was not on a pre-set course and would respond appropriately to developments,” said Justin Fabo, a senior economist at ANZ.

“The real test may come later, if markets continue to deteriorate and look to central banks to save them. Are policymakers’ guns loaded with blanks?”

It seemed some were already preparing for the worst.

Longer-term U.S. debt rallied hard as investors wagered that either the Fed would be unable to tighten at even a gradual pace, or that if it did hike it would only hasten the arrival of recession and deflation.

In a marked turnaround, yields on 10-year Treasuries fell to 1.6330 percent  almost exactly matching the lowest close from May 2013. Futures

The inexorable decline in U.S. yields continued to drag on the dollar, which reached lows last seen in October against a basket of currencies .

The yen was again lifted by safe-haven flows, as befits Japan’s position as the world’s largest creditor nation. The dollar sliced down through 111.36 yen to reach depths not delved since October 2014 at 110.99 .

The euro also weakened against its Japanese peer, sliding to a 2-1/2 year low of 126.06 yen. Against the greenback though, the euro drove to three-month high of $1.1355.