Global stock indexes, including the UK FTSE 100, have fallen their most since the terrorist attacks of September 11 2001 amid fears of a recession.
The FTSE 100 index tumbled 5.5% to 5,578.2, wiping £84bn ($163bn) off the value of its listed shares.
Indexes in Paris and Frankfurt slumped by about 7%, while markets in Asia, India and South America also dropped.
Investors questioned whether a recent plan to boost the US economy would be enough to avert a full-blown recession.
Last week the US government announced a financial stimulus plan.
US markets are closed for a public holiday on Monday and reopen on Tuesday but other markets worldwide reacted negatively to the US plans.
Francis Lun of Fulbright Securities in Hong Kong said the falls stemmed from disappointment that the US stimulus was "too little, too late" adding that investors felt "it wouldn't help the economy recover".
"Panic mode"
The worry is that tax breaks and spending measures will not be enough to boost consumer spending in the US, because deeper economic problems remain.
In particular, the slowing housing market and problems in the sub-prime sector - which lends to those with limited or no credit histories - has contributed to a slowdown.
"We're falling back into the crisis of confidence in the financial sector," said Hugues Rialan, of Robeco France.
"The banks have been reassuring the market over their exposure to US mortgage-related investments, but now we realise there is nothing reassuring about it," he said.
Finance firms were among the main fallers, with Dutch ING Group, Germany's Allianz and Swiss Re all falling about 10%..........
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