World stock markets have plunged after government bank bail-outs in the United States and Europe failed to stem fears of slower global economic growth.
In London, the FTSE 100 index lost 7.85% - its biggest percentage fall since 1987. In Paris the Cac-40 suffered its largest fall on record.
On Wall Street, the Dow Jones fell below 10,000 points for the first time since 2004. Earlier, Asian stocks took a hammering from investors.
Analysts said a failure of government intervention to improve banks' willingness to lend had left markets anxious.
This is despite the passage of a $US700 billion bank bail-outon Friday in the United States and efforts by several European countries to boost confidence in their banks.
In an attempt to reassure investors, the President's Working Group on Financial Markets, said on Monday that it was moving quickly to exercise the new powers it had been given as part of the Wall Street rescue package.
The group, which was formed after the 1987 stock market crash, said it would move "with substantial force on a number of fronts".
As one of the first effects of the rescue plan, the Federal Reserve announced that it would start paying interest on the reserves that banks are forced to deposit at the central bank.
In Germany, Analysts said that a 50 billion euro ($US68 billion) bail-out of Hypo Real Estate, the country's second-biggest commercial property lender, had alarmed investors.
Germany earlier appeared to announce an unlimited guarantee for private savings - though later said this was not the case and had instead given only a "political commitment" that savers would not lose deposits.
Denmark has already moved to offer full protection and Sweden has massively increased the level of protection it offers.
Other developments include:
Iceland's government offered unlimited guarantees on savers' deposits. It had earlier agreed measures for the country's banks to sell off some foreign assets in an attempt to shore up its entire financial system.
Trading in shares of Benelux bank Fortis was suspended - the day BNP Paribas took a controlling interest in the troubled finance group under an emergency deal with the Belgian and Luxembourg governments
Central banks across Europe - including the ECB and Bank of England - offered more than $US74 billion to banks in short-term loans in separate efforts aimed at trying to making cash available for the banking sector.
International Monetary Fund managing director Dominique Strauss-Kahn said Europe needed a collective response to the financial crisis and warned countries not to act alone.
Spanish Prime Minister Jose Luis Rodriguez Zapatero and French President Nicolas Sarkozy arranged meetings with the heads of their respective country's main banks to discuss the global financial crisis - and said the two leaders would meet later this week.
Markets down
In London, the FTSE 100 index was down 391.1 points, or 7.85%, at 4,589.2 - having lost 8.5% at one point.
Germany's Dax index lost 7.39%, while France's Cac-40 index dropped 9.04% - its biggest one-day fall since the index was created in 1988.
On Wall Street, the Dow Jones index pulled back some losses but was still 4.05% lower, down 418.39 points, at 9,906.99 points, while the Nasdaq lost 4.93%.
Earlier, Japan's Nikkei index closed down 4.3%, or 465 points, at 10,473.1 - its lowest close since February 2004.
Hong Kong's Hang Seng index slid 5%, while key Russian markets slumped by 15%.
Markets in India, China, Australia and Singapore also lost ground, while the main Indonesian market lost 10% - the biggest one-day fall on record.
Trading on key stock markets in Brazil and Russia was temporarily suspended after share prices plummeted by 10% and 15% respectively. Russia's RTS index ended 19.1% down.
Oil prices fall
The prospect of a slowdown denting energy demand saw oil prices fall further, dipping under $US90 a barrel.
In London, Brent crude dropped $US3.38 to $US86.87 a barrel, while US light, sweet crude fell $US3.85 to $US90.05 a barrel.
