Stocks took an even sharper dive late in the afternoon on Monday, as stricken investors sent the Dow Jones industrials down more than 700 points with 90 minutes remaining in the session.

Markets around the world spiraled downward on Monday as the banking crisis tightened its grip on the global economy. For the time since 2004, the Dow was trading below 9,500, a psychological milestone of 10k was passed in the morning, that came after the index lost more than 500 points in the first hour of trading alone.

Selling intensified throughout the morning as investors reeled from a series of high-profile bank bailouts in Europe, where governments scrambled over the weekend to save several major lenders from collapse.

The moves were aimed at resolving a problem at the center of the current credit crisis: the reluctance of banks to lend. The healthy functioning of the world’s economy is dependent on the easy flow of short-term loans among banks, businesses and consumers, a stream that has been cut off as banks become more fearful of giving out cash.

Despite a $700 billion bailout package passed by Congress last week, events over the weekend in Europe only intensified investors’ anxieties. European stocks fell by the biggest amounts in decades. Major indexes in London and Frankfurt lost more than 7 percent; stocks in Paris fell by 9 percent.

The FTSE 100, which was launched in 1984, fell 391.1 points, or 7.85%, to close at 4,589.2.
This means that £93.4bn has been wiped off the value of the index's shares.

In terms of points, Monday's fall was bigger than the slides seen in the wake of the September 11 attacks on the US and the 1987 stock market crash.

Mr Darling told MPs that the government would act to support the banking system as a whole as well as supporting individual banks
The chancellor said that European countries needed to work together to respond to the global financial crisis.

But despite pledges being given by some European Union countries, Mr Darling stopped short of guaranteeing all bank savings and called on EU members to co-ordinate action."When member states take unilateral action, it does have a knock-on effect," he said.

He also said that the Bank of England would inject a further £40bn into the financial system to help ease the credit crunch.