Many of the world's main stock indexes, including the UK FTSE 100, have posted their biggest falls since the terrorist attacks of 11 September, 2001.

The FTSE 100 index tumbled 5.5% to 5,578.2, wiping £84bn ($42bn) 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 plan to boost the US economy would do enough to avert a full-blown recession.

"It's another horrible day," said Francis Lun of Fulbright Securities in Hong Kong.

"Today it's because of disappointment that the US stimulus is too little, too late and investors feel it won't help the economy recover."

US markets are closed for a public holiday on Monday and will re-open on Tuesday.

'Panic mode'

The worry is that tax breaks and spending measures will do little to boost consumer spending in the US because of problems in the housing market.

Many shoppers are struggling under higher mortgage repayment costs, and default rates have surged.

At the same time, banks have had to become more careful about who they lend to because they have lost billions of pounds on investments linked to the US housing and mortgage markets.

The state of the US economy is very important to many of Europe's and Asia's biggest companies as it is one of their biggest export markets.

Any slowdown in demand is likely to hurt corporate profit growth, and push share prices even lower, analysts warned.

"It's becoming more and more difficult as the market is now in panic mode," said Hugues Rialan of Robeco France.

"We're falling back into the crisis of confidence in the financial sector.

"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.

But some analysts took comfort from the prospect of falling US interest rates.

"If interest rates are cut to the extent we and others expect, the likelihood is that today's share prices will look like silly values in 12 months' time, if not before," said Mike Lenhoff at Brewin Dolphin Securities.

Source: BBC NEWS