European markets have fallen sharply in morning trade, touching five-year lows, as investors continue to fret about the depth of the global economic slowdown.
The UK's FTSE 100 fell 5.6% to 3,665 at one point, its lowest level since April 2003, before recovering slightly to 3,710, down 4.5% from Friday's close.
Its decline came after Japan's Nikkei index earlier ended at a 26-year low.
The pound also continued its recent falls, dropping against the dollar to $1.5341 in early trading.
The euro was also lower, sliding to $1.2377, around levels last seen in April 2006.
Its decline came after Japan's Nikkei index earlier ended at a 26-year low.
The pound also continued its recent falls, dropping against the dollar to $1.5341 in early trading.
The euro was also lower, sliding to $1.2377, around levels last seen in April 2006.
FTSE 100 INDEX: 27 October 2008
*All Times GMT
"There's lots of volatility, not just in the equity market, but in the interest rate and currency markets too," said Neil Parker, market strategist at Royal Bank of Scotland.
"We're going to get further big swings as the markets watch for what the authorities are going to do."
The other main European share indexes also fell sharply, with Germany's Dax down 3.3%, and France's Cac losing 5.4%.
There is more pain left. The global turmoil does not appear to be resolving soon
Atul Mehra, J M Financial
Japan's Nikkei 225 index ended down 6.4% at its lowest level since 1982.
On the currency markets, Japan's yen stayed near its 13-year high against the US dollar, despite threats of G7 intervention.
Asian impact
In other market news:
In the Philippines, the main index fell 12.3%, as the country's second biggest bank Banco de Oro Unibank reported a loss of 1.3bn pesos ($26.8m; £16.8m) because of its exposure to the US investment bank Lehman Brothers
The Seoul market reversed early losses to close up 0.8% after South Korea's central bank cut its key interest rate from 5% to 4.25% at a rare, unscheduled meeting
In Hong Kong, the Hang Seng closed down 12.7% in its biggest single-day fall since 1991
Chinese shares also fell, with the Shanghai Composite Index losing 6.3% to its lowest level since September 2006
India's Sensex index dropped 6.1% to its lowest level since November 2005.
"There is more pain left. The global turmoil does not appear to be resolving soon," said Atul Mehra at the brokerage J M Financial in Mumbai.
Yen warning
Earlier on Monday the Group of Seven (G7) industrialised nations issued a statement warning that the strength of the yen was a threat to economic stability, which was taken as a threat of co-ordinated action to reduce the value of the currency.
While the yen briefly weakened, it soon climbed back towards Friday's 13-year high against the dollar.
The yen has been strengthening as a result of the end of the carry trade, in which traders borrowed the Japanese currency and used it to buy currencies with higher interest rates.
As the difference between Japanese rates and those elsewhere in the world has fallen, traders have been unwinding the carry trade, which means they have been using other currencies to buy yen, which has boosted the Japanese currency.
In other currency news, the Australian government intervened for a second time to support its currency, which was trading at a 5-year low against the US dollar. One US dollar was worth 0.6122 Australian dollars.
The Australian central bank last intervened more than a year ago and before that had not done so since 2001
*All Times GMT
"There's lots of volatility, not just in the equity market, but in the interest rate and currency markets too," said Neil Parker, market strategist at Royal Bank of Scotland.
"We're going to get further big swings as the markets watch for what the authorities are going to do."
The other main European share indexes also fell sharply, with Germany's Dax down 3.3%, and France's Cac losing 5.4%.
There is more pain left. The global turmoil does not appear to be resolving soon
Atul Mehra, J M Financial
Japan's Nikkei 225 index ended down 6.4% at its lowest level since 1982.
On the currency markets, Japan's yen stayed near its 13-year high against the US dollar, despite threats of G7 intervention.
Asian impact
In other market news:
In the Philippines, the main index fell 12.3%, as the country's second biggest bank Banco de Oro Unibank reported a loss of 1.3bn pesos ($26.8m; £16.8m) because of its exposure to the US investment bank Lehman Brothers
The Seoul market reversed early losses to close up 0.8% after South Korea's central bank cut its key interest rate from 5% to 4.25% at a rare, unscheduled meeting
In Hong Kong, the Hang Seng closed down 12.7% in its biggest single-day fall since 1991
Chinese shares also fell, with the Shanghai Composite Index losing 6.3% to its lowest level since September 2006
India's Sensex index dropped 6.1% to its lowest level since November 2005.
"There is more pain left. The global turmoil does not appear to be resolving soon," said Atul Mehra at the brokerage J M Financial in Mumbai.
Yen warning
Earlier on Monday the Group of Seven (G7) industrialised nations issued a statement warning that the strength of the yen was a threat to economic stability, which was taken as a threat of co-ordinated action to reduce the value of the currency.
While the yen briefly weakened, it soon climbed back towards Friday's 13-year high against the dollar.
The yen has been strengthening as a result of the end of the carry trade, in which traders borrowed the Japanese currency and used it to buy currencies with higher interest rates.
As the difference between Japanese rates and those elsewhere in the world has fallen, traders have been unwinding the carry trade, which means they have been using other currencies to buy yen, which has boosted the Japanese currency.
In other currency news, the Australian government intervened for a second time to support its currency, which was trading at a 5-year low against the US dollar. One US dollar was worth 0.6122 Australian dollars.
The Australian central bank last intervened more than a year ago and before that had not done so since 2001
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