LONDON, Jan 21: Stocks plunged across the world on Monday, with markets in Europe, Asia and Latin America tumbling as much as seven per cent as investors rushed to sell amid fears of a global recession, dealers said.

Wall Street was closed for a bank holiday, but on every other continent stock markets had one of their worst days in years.

Dealers said a new plan by President George W. Bush to ward off a US recession was not enough to offset all the bad news coming through on the banks as a result of the crisis in the US housing market.

“People aren’t buying the US bail-out story and that feeling has been exacerbated by the weakness overnight in the Asian markets,” said Richard Hunter, equities analyst at broker Hargreaves Lansdown in London.

Indian share prices tumbled to close down 7.41 per cent, the steepest one-day fall ever as local and foreign investors dumped blue-chip firms, dealers said.

The 30-share Mumbai stock exchange Sensex index ended down 1,408.35 points to 17,605.35, its sixth day of losses. The Sensex is down 16.9 per cent since the start of last week.

But it fell as much 2,062.2 points or 10.84pc to an intra-day low of 16,951.5 during trading.

The previous sharpest fall for the Sensex was of 826.38 points or 6.76 per cent on May 18, 2006.

“Panic set in on sustained overseas funds sell-off. Valuations did appear stretched late last year,” said R. Balakrishnan, executive director with Centrum Broking.

“While professional traders could stay away, smaller investors could find some valuations attractive now,” he added.

“The Indian markets looked overstretched. Initial public offerings had also sucked up some liquidity from investors hands,” said Rashesh Shah, chief executive with brokerage Edelweiss Capital.

Property, oil, metal and auto stocks saw the sharpest falls, which extended to mid- and small-cap shares.

In New Delhi, Prime Minister Manmohan Singh tried to calm the country’s burgeoning investor community following Monday’s massive downswing in the capital market.

“Considering the fundamentals of our economy, which is sound, I am confident that the markets that we seek will grow in an orderly fashion. Time-to-time fluctuations are part of the market processes,” he said.

The Paris CAC 40 lost 6.83, Frankfurt’s DAX shed 7.16pc and Madrid fell 7.54 per cent.

As European exchanges were closing after their traumatic day, bourses in Latin America were opening with similar bad news.

Brazil’s Sao Paulo market — the biggest in the region — slid 6.0pc, Buenos Aires plunged 4.64 per cent while Mexico plummeted 4.77 per cent.

The nervousness in Europe and America was fuelled by falls earlier in the day across Asia, with Tokyo’s benchmark index closing a hefty 3.86pc lower.—AFP