European crisis sends FTSE tumbling

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Investors took scant comfort from Friday's backing of a US financial rescue to leave the FTSE 100 Index down almost 5% or 240.5 points at 4739.

Japan's Nikkei 225 average was down more than 4% at a four-year low while in Hong Kong the Hang Seng slipped 4%.

Banks were under pressure after German mortgage lender Hypo Real Estate became the latest to receive state aid.

Analysts said the impact of the latest crisis crossed all sectors amid fears of slowing demand.

Halifax Bank of Scotland - soon to merge with Lloyds TSB - plunged 15% in the sell-off, while Royal Bank of Scotland suffered a 10% drop.

The market was also hit hard by hefty falls from heavily-weighted mining stocks after experts warned that the sector's earnings could almost halve this year.

Declines seen on the Footsie were mirrored elsewhere in Europe, with Germany's Dax 4% worse off amid alarm over the country's rescue of its second biggest commercial property lender.

A raft of European Government moves to save banks over the weekend also saw fears mount over rapidly-spreading contagion from the credit crunch.

Iceland scrambled to secure a deal to rescue its banks and wider economy, while French bank BNP Paribas agreed to buy a majority stake in struggling bank Fortis, which is already part-nationalised.