Asian and European markets have plunged in the first session since the US congress approved a $700bn bailout package and European leaders came under pressure to assist troubled financial institutions.

Japan's Nikkei index dived nearly five per cent to its lowest point in more than four years and stocks all across the region followed suit on Monday.

In Europe, French stocks plummeted 4.67 per cent, while London's FTSE fell 5.01 per cent at the start of trading and the German DAX was down 3.29 per cent shortly after opening. 

The FTSEurofirst 300 index of top European shares fell 4.2 per cent in 13 minutes with banks taking the biggest hit. BNP Paribas was down 4.2 per cent, Credit Agricole six per cent, Dexia 12.8 per cent and Societe Generale 6.9 per cent.

Amid the turbulence, the euro fell to a 13-month low of $1.3551 and oil prices dropped below $90 a barrel, their lowest level in eight months.

Shares suspended

"There's just nothing positive out there. Figures are bad in the States, Europe's bad, Japan's bad and China's probably slowing," David Spry, research manager at broker FW Holst in Melbourne, said.

The MSCI index of Asia-Pacific stocks outside Japan slid 5.35 per cent to their lowest since December 2005. Hong Kong's Hang Seng index closed down five per cent, with shares of China Mobile, China Construction Bank and HSBC leading the fall.