German savings pledge raises stakes for Brown | In depth: every country for itself as European unity collapses | Comment: Anatole Kaletsky | Analysis: David Wighton | French rescue hopes sunk by Merkel | Stricken Iceland sends out financial SOS | Suzy Jagger in New York | Darling to resist pressure for blanket savings guarantee

The FTSE index of leading shares dived by more than six per cent this morning, following sharp losses across Asian equity markets on growing concerns over the global financial crisis. By mid-morning, the FTSE 100 was down by more than 300 points at 4,670.9 — a four-year low.

Alistair Darling will make a statement later today to Parliament on the plan to bail out the UK's banks. British gilt futures leapt a full point in early trading as sharp equity market losses and concern over the global banking system made government bonds more appealing.

Volumes were relatively modest with 838 million shares traded in the first three hours of trading compared with 5.1 billion shares traded in the full eight-hour session on Friday.

The December gilt future rose as high as 113.52 in opening trade, moving back within sight of Friday’s contract high.

Stock markets dropped sharply across continental Europe, with Germany’s DAX index down 5.7 per cent, and France’s CAC 40 down by 6 per cent.

In currency markets, the euro fell sharply in early trading, taking it to a 13-month low against the dollar and a 7-month low against sterling as investors homed in on European banking sector troubles.

The euro was down 3 per cent at 140.48 yen, while the dollar dropped 2 per cent to 103.19 yen, after earlier falling below 103 yen to a near five-month low.

The euro was trading at $1.3617 against the dollar, while the pound was at $1.7517, or more than 1 per cent, driven down by the fall in share prices.

The approval of the $700bn US rescue plan failed to ease fears in Asia over the American economy and the global financial crisis.

In Tokyo, the benchmark Nikkei average plunged 9.4 per cent — its biggest one-day fall since 1987 — to close at 9,203.32 as stocks, including Sony and Toyota, were hit by growing concern that the strength of the yen against the dollar and the euro would hit exports. Sony fell by almost 7 per cent to 2,810 yen, while Toyota was off 4.4 per cent at 3,900 yen.

The broader Topix dropped 8 per cent to 899.01.

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