European markets have fallen sharply in morning trade, touching five-year lows, as investors continue to fret about the depth of the global economic slowdown.
The UK's FTSE 100 fell 5.6% to 3,665 at one point, its lowest level since April 2003, before recovering slightly to 3,693, down 4.9% from Friday's close.
Its decline came after Japan's Nikkei index earlier ended at a 26-year low.
The pound also continued its recent falls, dropping against the dollar to $1.5341 in early trading.
The euro was also lower, sliding to $1.2377, around levels last seen in April 2006.
Earlier on Monday the Group of Seven (G7) industrialised nations issued a statement warning that the strength of the yen was a threat to economic stability, which was taken as a threat of co-ordinated action to reduce the value of the currency.
While the yen briefly weakened, it soon climbed back towards Friday's 13-year high against the dollar.
The yen has been strengthening as a result of the end of the carry trade, in which traders borrowed the Japanese currency and used it to buy currencies with higher interest rates.
As the difference between Japanese rates and those elsewhere in the world has fallen, traders have been unwinding the carry trade, which means they have been using other currencies to buy yen, which has boosted the Japanese currency.
In other currency news, the Australian government intervened for a second time to support its currency, which was trading at a 5-year low against the US dollar. One US dollar was worth 0.6122 Australian dollars.
The Australian central bank last intervened more than a year ago and before that had not done so since 2001
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