European shares fell 5.6 per cent by midday on Monday, threatening their worst one-day decline since the September 11, 2001 terrorist attacks.
Investors, fearing a US recession, dumped stock across the board. The US stock market, meanwhile, was closed today for a holiday.
According to Reuters, at 12:04 GMT the FTSEurofirst index index of top European shares was down 5.1 per cent at 1,289.42 points, having earlier hit 1,280.94 - a level not seen in eighteen months.
Banks contributed a quarter of the European index's losses, with energy stocks such as BP among the top individual negative weights.
In the gaming industry, shares in Ubisoft fell 11.54 per cent, with SCi experiencing a 7.8 per cent decline.
The losses are being felt worldwide, with the MSCI's main index of world stocks dropping 3.3 per cent to its lowest level since December 2006, resulting in a 12 per cent drop so far this year.
The losses on the blue-chip stock indices of Germany, Britain and France alone amounted to more than USD 350 billion, which is roughly the size of the combined economies of New Zealand, Hungary and Singapore.