Clik here to view.
FTSE 100 closes down 1.9% with Dow Jones off 1% as policymakers row over the Greek debt crisis and new fears emerge over global economic growth
Deep divisions among senior EU policymakers over the Greek debt crisis and fears of a sharp slowdown in growth across Europe, China and the US sent world stock markets into a downward spin on Monday.
The FTSE 100 tumbled 1.9% to 5835.9, a fall of 112.6 points, while the Dow Jones index had slumped 135 points, or more than 1%, by mid-afternoon in New York. A day of anxious trading also saw the euro fall one-and-a-half cents against the dollar as investors piled out of the currency.
Europe suffered more than other regions after a weekend of economic and political strife that added to concerns that the eurozone may be forced to cope with countries defaulting on their debts or the ignomy of some leaving the monetary union altogether.
"It was a bad weekend for the eurozone and in particular for those politicians and financial authorities trying desperately to keep the euro project together," said Jeremy Batstone-Carr, director of private client research at Charles Stanley.
Italy joined the roll-call of nations to be singled out by the ratings agency Standard & Poor's for a warning over its prospects for growth this year. S&P revised its outlook for Italy over the weeken to "negative" from "stable".
Meanwhile, the defeat of the Spanish socialist party in local and regional elections ut in question Madrid's austerity programme. Spain's 10-year borrowing costs increased to 5.6% – the highest rate since January.
Economists across the political spectrum said the new regional government in Spain could unearth previously undisclosed debts and push the country into a Greek-style crisis.
Paul Krugman, professor of economics at Princeton University, said: "Europe's troubled debtor nations are suffering further economic decline thanks to austerity programmes, and confidence is plunging instead of rising. It's now clear that Greece, Ireland and Portugal can't and won't repay their debts in full, although Spain might manage to tough it out."
WestLB rate strategist Michael Leister, said: "The key point is that the crisis seems to be taking hold even of peripheral countries regarded as solid. Sentiment is that there appears to be no end to it now Italy is being scrutinised by the ratings agencies."
A survey of eurozone manufacturers and services firms revealed a sharper than expected slowdown in activity. A boom in Germany and to a lesser extent France and Holland appeared to be petering out.
Analysts said the gloomy picture supported concerns the eurozone will return to a period of low or negligible growth after a brief spurt over the last six months.
"The eurozone PMI continued to show robust expansion, but the rate of increase showed the sharpest slowing since just after the collapse of Lehman's in late-2008," said Chris Williamson, chief economist at Markit, the research firm that produces the index.
He pointed to a concurrent fall in service sector business confidence to its weakest since July 2009 as a sign the slowdown may prove more than a temporary blip.
The political situation also worsened as policymakers bickered over how to answer calls from some countries for more leeway in dealing with their debts.
A prominent European Central Bank member said the EU should take a hard line on the negotiations over Athens' debts, arguing that negotiations to cut Greece's debt mountain would undermine the credibility of the EU.
In a thinly veiled threat, Lorenzo Bini Smaghi warned that the ECB would be unable to use Greek bonds as collateral if it forced investors to accept a cut in the value of its loans, a situation that would leave the country to fend for itself in the private markets.
With the effective interest rate on two-year Greek bonds already above 26%, analysts said it was hard to see how Greece could fend for itself outside the euro.
Greek prime minister George Papandreou has discussed new emergency measures to cut Greece's deficit in a bid to convince leaders the country can avoid a restructuring.
The Athens administration hinted that a series of privatisations would be announced imminently to raise €50bn (£43.6bn) , led by sales of the state's stakes in the OTE telecoms company, Postbank, the ports of Thessaloniki and Athens and the Thessaloniki water company.
Investors, jaded by promises from the Greek government of quick action to solve its debt crisis, shrugged off the news.
The cost of insuring Greek debt rose, with five-year credit default swaps (CDSs) on Greek debt rising 50 basis points to 1390, according to Markit.