London, Frankfurt and Paris all tumbled more than six percent before pulling back slightly while a 15-per cent dive in Moscow forced yet another halt to Russian trading.

"There is all-out panic," said ING senior strategist Adrian van Tiggelen.

"Everyone had hoped that after the acceptance of the package in the US and the bailouts in Europe, things would cam down but in effect, there are still strong fears of the domino effect."

Iceland's stock market suspended trading in all financial shares including three major banks amid reports of a government rescue of the stricken banking sector.

Investors dumped shares after US stock markets had fallen sharply on Friday despite US congressional approval of a 700-billion-dollar bank bailout.

In afternoon trade, London was down 5.23 per cent, Paris showed a loss of 5.63 per cent and Frankfurt shed 5.43 per cent.

"We have a seriously weak and fear driven market at our hands," said Tom Hougaard, chief market strategist at City Index.

"It is anyone's guess where we will end the day."

Yesterday, Tokyo ended down 4.25 per cent as Hong Kong shed 5.0 per cent, Seoul tumbled 4.3 per cent and Sydney lost 3.3 per cent.

Shanghai dived 5.23 per cent and Mumbai plunged 5.78 per cent to close at two-year lows.

European stocks plummeted after Germany's fourth biggest bank, Hypo Real Estate, had to be rescued afresh over the weekend - news that pushed the euro to a 13-month low against the dollar yesterday.

Oil meanwhile tumbled to eight-month lows below 90 dollars a barrel in London and New York as worsening financial turmoil triggered fears about slowing demand for energy.

"The market is not convinced that the US bailout package can protect the economy from the financial crisis," said Toyo Securities strategist Ryuta Otsuka.

Riyadh, the largest stock market in the Arab world, shed almost 10 per cent halfway through trading on Monday and shares in other energy-rich Arab states in the Gulf also slumped.

- Nampa-AFP

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