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An index is said to be in correction when it closes 10 per cent or more below its 52-week high. All major bourses were off a similar amount.

U.S. inflation in the first half of the year was probably “markedly lower” than reported, but policymakers are unlikely to set interest rates incorrectly as a result, according to an analysis published Monday by the San Francisco Federal Reserve Bank. The Fed stepped...

We are not expecting conditions to worsen in China.

Shares in banks and asset managers also fell, and the Euro STOXX Volatility Index rose to its highest since late 2011 – more evidence of investor unease.

Brent and US crude both fell to six and half year lows and Carsten Fritsch, oil analyst at Commerzbank, speaking at Reuters” Global Oil Forum, said the collapse was “not about oil market fundamentals’ but about China.

In addition, the PBOC is reducing the reserve requirements (RRR) for most big banks from 18.5 percent to 18.0 percent.

China has sought to calm its panic-stricken stock markets by cutting interest rates and loosening constraints on bank lending after a second day of plunging share prices.

The speed at which this happened yesterday was eerily reminiscent of the May 6, 2010 flash crash, as bids seemingly disappeared only to resurface as fast as they vanished.

Brent oil closed at a $4.45 premium to West Texas Intermediate, the U.S. benchmark.

Bahrain also declined, but it was the only market that lost below one per cent at 0.37 per cent.

The tumult began when the Dow opened Monday with a 1,000-point nosedive.

The rule has been used only a few times in recent history, including during the global recession in January 2008 and in May 2010. This followed a dramatic drop in pre-market open futures, with the Dow Jones Industrial Average futures falling more than 700 points.

Some people on Twitter called it “Black Monday”.

Fears that Chinese growth is weakening dragging down the global economy with it are already hammering commodities and world stock markets. For years, investors have been fretting that the market could drop sharply when the central bank starts raising rates.

“The initial reaction in the equity market was aggressive as many expected that this news would be out at the weekend”, Guardian Stockbrokers’ director of trading, Atif Latif, said.