London's FTSE 100 Index has suffered a record slump after a further bloodbath in panic-stricken financial markets.
The index of leading shares plunged another 3.4%, or 178 points, to close at a year-low of 5068.95 - the first time in its 27-year history that it has suffered falls of more than 100 points for four sessions in a row.
The panic-selling intensified after the opening of US markets as traders on Wall Street got their first chance to react to Standard & Poor's historic decision to cut the country's AAA credit rating. Investors fear this will batter already weakening consumer confidence and hurt economic growth in the United States and beyond.
Wall Street's dive washed away earlier hopes of a rally after the European Central Bank intervened in the markets for debt-laden Italian and Spanish bonds, helping to reduce borrowing costs in both countries.
Louise Cooper, an analyst at BGC Partners, said: "Equity markets are just dropping through the floor. Normally you would expect to see some kind of relief rally as bottom fishers come in looking for a bargain, but people are just terrified."
The London market lost 10% of its value last week as nearly £150 billion was slashed from the value of the UK's 100 biggest companies in its worst period of trading since the autumn of 2008.
The continued market turmoil has been bad news for millions of savers, who will have seen their pension funds hit dramatically. Meanwhile, the safer haven of gold pushed to a new record high above 1,700 US dollars per troy ounce on Monday. With oil prices off by more than three US dollars a barrel, supermarkets Asda and Morrisons offered some relief for motorists by cutting the price of petrol.
Monday's fall wiped another £46 billion off the value of the FTSE 100 Index, taking the overall amount lost in the last seven sessions to £210 billion. The decline of more than 800 points represents a fall of 13.7%.
Eurozone central bankers had earlier taken emergency action to shore up Italy and Spain to fend off further turmoil. At the end of a weekend of frantic activity, European Central Bank president Jean-Claude Trichet announced plans for a bond-purchase programme aimed at driving down the interest yields which threaten their shaky budgets.
Experts have suggested the latest stock market falls and gloomy outlook could spark a renewed round of quantitative easing by the Bank of England, while Deputy Prime Minister Nick Clegg hinted the Government could cut business taxes to drive growth. He said: "There's a whole raft of things we are doing, and we will do more as we develop our growth review to stimulate growth in the British economy."