PARIS, Oct 9, 2008 (AFP) - A stock market crash is a sudden and precipitous decline in the prices of shares which affects a whole market or series of markets.

A key characteristic is the snowball effect, in which investors all rush to sell at the same time, creating a vicious circle.

There is no precise economic definition of a crash, but in practical terms, the word has tended to be used when the value of shares falls by 20 percent or more in the space of a few days.

The falls seen in world stock markets this week are clearly approaching that scale, prompting comparisons with the two major crashes of the past century, those of 1929 and 1987.

Those two previous events were however very different.

Activity quickly recovered after the 1987 collapse, whereas the 'Great Crash' of 1929 was to be followed by the 'Great Depression' -- years of mass unemployment and misery which only ended with the rearmament sparked by World War II.

The crash of 1929 followed a speculative bubble during which millions of ordinary Americans had been persuaded to buy shares, often in property investments that turned out to be worthless.

The 'Roaring Twenties', as the period came to be called, came to an abrupt end.

On Monday October 28, 1929 the Dow Jones index fell 13 percent and the following day, 'Black Tuesday', it fell a further 12 percent.

By the end of November the New York stock market had lost almost half its value, and in the following years it sank even further.

At its nadir, in mid-1932, the Dow was almost 90 percent below its pre-crash level, and it was not to return to pre-1929 levels until 1954, over two decades later.

World War II had devastated large parts of Europe and Asia, and post-war reconstruction brought three decades of growth in jobs, trade and stock markets. But unemployment was to return in the 1970s, and market instability in the following decade.

The biggest shock in terms of stock prices came on Monday October 19, 1987, when the Dow suffered its largest single-day loss ever, of almost 23 percent. Huge slides hit most other world markets.

However the fall -- which was exacerbated by computer-driven trading systems -- was to be short-lived.

Indices bounced back strongly in the following days, and the Dow recovered to pre-crash levels in just two years.

More recently, dramatic stock market falls have occurred in 1997, when an economic crisis in Asia sent stocks plunging, in 1998 in Russia, in 2000, following a bubble sparked by the rise of the Internet, and in 2001, in the wake of the terrorist attacks on the United States, and in Argentina in a crisis involving huge devaluation.

The current crisis, like the events of 1929, has been preceded by a property market bubble.