Billions of pounds were wiped off London stocks, as leading shares had one of their worst days of the year.

The FTSE index of leading shares had slumped almost 3%, or 146.8 points, to 5476 by 1550 GMT.

The fall comes despite the Bank of England's decision to slash UK interest rates by 0.5% to 6.75% in an effort to revive the UK economy and help stave off a recession.

Markets around the world took a tumble as worries about the global economic recession resurfaced.

Leading shares in France and Germany fell more than 2%.

The New York, US shares also got off to a poor start.

The Dow has slipped 40 points to 8743.

The fresh falls come in the wake of a disappointing performance on the Asian stockmarkets, with shares in Hong Kong and Japan suffering heavy losses.

Dealers remain nervous about the economic turmoil that has ravaged Russia, Asia and Latin America.