Australian investment banking major, Macquarie Group issued a warning to investors on Thursday, that volatility in financial markets were adversely impacting parts of its business, which sent Macquarie shares into a tail spin.

During a 32 page slide presentation given at a conference organized by rival UBS, the investment bank said that conditions in the markets were increasingly uncertain, and this has made the ability to make accurate short term forecasts increasingly difficult.

“These conditions are adversely impacting some business activity levels,” Australia’s biggest investment bank said.

Macquarie also said it was “too early to evaluate (the) implications” for 2010-11.

Shares of the investment bank took a tumble as soon as stock market opened, falling by as much as 4.8 per cent on opening, but later recovered to a 3 per cent fall after the first fifteen minutes of trading.

The warning by the investment bank followed on the heels of the US Federal Reserve downgrading the outlook for the world’s largest economy, amid fears of the impact of the European sovereign default crisis.

“Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad,” the FOMC said in its carefully worded statement.

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