FTSE CLOSE: London shares finish down nearly 3%, with global banks across Europe and the US some of the biggest losers 

16:30: The Footsie has posted a fall of nearly 3 per cent in a manic day's trading that saw billions wiped off stock markets globally. 

London's premier index closed down 158.7 points at 5689.36, meaning that it has fallen almost 9 per cent since the start of the year.

In Europe the losses were even worse, with both Germany's DAX and France's CAC 40 finishing down 3 per cent. The US Dow Jones fell 2 per cent or 353.7 points to 15,851.2 in early trading.

Rout: Deutsche Bank fell 7.3 per cent at a 7-year low today, in what has been a torrid day's trading for banks

Banks have been some of the biggest fallers following a string of bad results, negative interest rates and worries about a high level of unprofitable loans on their balance sheets in recent weeks.

Commerzbank finished down more than 8 per cent at a two-and-a-half year low, Deutsche Bank fell 7.3 per cent at a 7-year low and BNP Paribas was off 5 per cent at a 3-year low.

In the US, not even the mighty Goldman Sachs could avoid the rot. It is currently the biggest faller on the Dow Jones, falling almost 5 per cent in morning trading in New York. 

Meanwhile in London HSBC finished 4.3 per cent lower at or 19.9p at 437.9p, Lloyds was down 1.2 per cent, or 1.0p, at 61.0p and Barclays was off 5.3 per cent, or 9.3p at 163.9p.

Royal Bank of Scotland lost 4.6 per cent, or 11.2p at 230.7p and Standard Chartered closed down 6 per cent, or 26.0p, at 427.0p.

Owen Callan, senior analyst at Cantor Fitzgerald, said: 'People are worried about the global economy and particularly now we are beginning to look at the banks. 

'You are seeing more and more people saying: is this 2008 again? Maybe not quite as severe, but do we need to be worrying about the banking sector and risk assets on a bigger level?'

Jaisal Pastakia, at Heartwood Investment Management, added: 'Concerns are increasing that in a climate of negative interest rates and prolonged dovish monetary policy, banks' profitability will be squeezed. 

'A high level of unprofitable loans on banks' balance sheets impacts the broader economy by stifling both domestic demand and bank lending growth.'

Global markets have suffered a torrid start to the year due to a slowdown in emerging markets and oil price falls. Brent crude fell just under half a US dollar to $33.69 a barrel today.

BT was down more than 4 per cent or 21.1p to 454.8p, after it confirmed it had begun the search to replace its finance director.

Engine-maker Rolls-Royce saw its shares fall 2.6 per cent or 13.8p to 515p amid fears it will slash its dividend for the first time in more than 20 years.

Gold rising to a six-month high gave uplift to gold miner Randgold Resources, which hailed 'one of the best years' in its history despite seeing annual pre-tax profits fall 26 per cent compared with a year ago. Its share were up 13.2 per cent or 700p to 6,000p.

Elsewhere, Tool rental firm Speedy Hire said it had agreed to buy rival OHP as it seeks to expand its presence in the rail market. Shares lifted 4 per cent or 1.5p to 38.2p.

The pound was slightly down against the US dollar at $1.43, as traders still reacted to last week's US jobs data which will further strengthen the dollar if a second rates hike follows. The US Federal Reserve raised rates for the first time in almost a decade in December. Sterling was marginally down against the euro at just under €1.29.

The biggest risers in the FTSE 100 were Fresnillo up 7.8% or 61.5p to 849.5p, InMarsat up 7% or 71.5p to 948.5p, Anglo American up 3.5% or 12.7p to 376.1p and Randgold Resources up 13.2% or 700p to 6,000p.

The biggest fallers in the FTSE 100 were Worldpay down 8.6% or 26.2p to 275.6p, Berkeley Group down 7% or 261p to 3,129p, IAG down 6.1% or 31p to 475.3p and Ashtead Group down 7% or 68p to 828p.

14:50: The Footsie remained firmly on the back-foot in mid-afternoon trading as US stocks joined in the global stock market rout.

Not long after lunch, the FTSE 100 index was down 134.1 points at 5,713.9 - only marginally better than its level at lunchtime. Meanwhile in Germany the DAX has fallen below the 9,000 mark for the first time since October 2014, currently down some 2.8 per cent.

On Wall Street the Nasdaq fell 82 points at 4,530.0, while the S&P lost 22.0 points at 1,857.0 and the Dow Jones was off 185.0 points at 16,014.0 at the open.

Sea of red: Traders saw Wall Street open down and for many the finishing bell cannot come fast enough 

Just like in Europe, its is large banks that have been among the biggest losers. Bank of America has fallen 4.9 per cent, Citigroup 4.3 per cent, and Goldman Sachs 3.8 per cent.

Petroleum-linked stocks have also been damaged after oil prices resumed their downward trend. ConocoPhillips tumbled 2.7 per cent, Anadarko Petroleum 5.9 per cent and oil-services company Weatherford International 5.5 per cent. 

Investors are continuing to head to safe haven assets and US 10-year Treasury yields have fallen to 1.796 per cent as prices rose, while 10-year German government bond yields fell to 0.245 per cent while Southern European bonds sold off sharply. 

Connor Campbell, at Spreadex, said: 'Unsurprisingly Monday's US open added little to the markets beyond an extra dose of misery, an empty calendar leaving the global indices stranded in a bearish no-man's land.

'Plunging 330 points after the bell, the Dow Jones joined its European peers for a truly dismal day of trading. That drop has seen the Dow fall through the 15900 mark to touch fresh week and a half lows.'

He added: 'The FTSE, continually harmed by Brent Crude's insistence at trading below $33.50 per barrel, fell by 2.7 per cent, zipping past the 5700 level for the first time since mid-January. 

'The Eurozone, meanwhile, continued to be the source of the day's largest losses. The CAC dropped by over 3% and now sits a mere 75-ish points above 4000; the DAX was equally as dire, matching that 3 per cent fall to drop below 9000 for the first time since October 2014.'

'Frustratingly it looks like there is little on the cards tomorrow to change the intensely bearish atmosphere currently suffocating the life out of the markets, with the week's major events occurring from Wednesday onwards.'

Where's the bottom?: This morning oil futures hit $29.80 a barrel as investor fear gripped global markets

13:00: The Footsie suffered a disastrous morning's trading, hit by falling oil prices, worrying China data and tumbling European and UK bank shares.

By lunchtime the FTSE 100 index down 2.3 per cent, or 138.4 points at 5,709.0 points, as the index managed to wipe billions of pounds of value in just five hours trading.

The rout was Europe wide, with shares on the Paris CAC 40 down 3.0 per cent, while Germany's DAX has also slid by the same margin. Meanwhile the Greek stock market has slumped by 5 per cent to its lowest level since 2012.

Investors have headed for cover and snapped up safe haven assets, such as US and German government bonds. Gold has also climbed 0.23 per cent to $1,176.11 a troy ounce.

Grim: A trader suffers a migraine after a tough morning trading session and there looks to be no respite 

The sell off appears to have been triggered by data out earlier this morning which showed that China burned through another $99.5billion in foreign exchange reserves last month, in its attempts to defend the yuan.

This was then followed by oil tumbling to $30 a barrel. The pound is also a cent down against the US dollar at 1.44, as traders reacted to last week's US jobs data which will further strengthen the dollar if a second rates hikes follows in March.

Connor Campbell, at Spreadex, said:  'A slow start soon turned disastrous this Monday, with many of the European indices plunging to lows not seen since October 2014.

'With Citigroup warning of a potential 'death spiral' if investors behave irrationally to the stronger dollar/weaker commodities/harmed emerging markets cycle that the world appears to be trapped in at the moment, the markets have taken another kicking this Monday. 

'It doesn't help, of course, that the day's economic calendar is so sparse, with investors left pondering the purely negative side of things as the morning continued.'

Some of the worst performing stocks across Europe were bank shares, following worries over non-performing loans, a slew of weak earnings from large banks and weak growth prospects.

Commerzbank has dropped by 4.7 per cent, Deutsche Bank is down 3.4 per cent, and BNP Paribas has lost 3.3 per cent.

In London Lloyds and Royal Bank of Scotland are both down 1.7 per cent. Lloyds has slumped 1.3p at 60.5p and Royal Bank of Scotland has fallen 5.8p at 236.1p. 

Elsewhere BT was down more than 1 per cent, or 7.7p to 468p, after it confirmed it had begun a search for a new finance chief. 

Engine-maker Rolls-Royce saw its shares fall more than 2 per cent, or 13p to 516p, amid fears it will slash its dividend for the first time in more than 20 years.

The embattled firm has seen its share price fall as reports speculate it could chop a quarter off 2014's payout of 23.1p a share. 

The City expects the firm to report an annual underlying pre-tax profit that has slumped by 16.5 per cent to £1.35billion compared to a year ago, after it was hit by defence spending cuts and falling crude prices that have impacted its Marine division, which supplies the oil industry.

In another sign of unease, shares in UK chipmaker ARM Holdings have slipped by 5 per cent, or 51.0p, at 932.0p putting it at the bottom of the FTSE 100 leaderboard.

ARM reports results on Wednesday, and analysts fear it is suffering from the slowdown in the US technology sector.

Elsewhere, Tool rental firm Speedy Hire said it had agreed to buy rival OHP, as it seeks to expand its presence in the rail market.

Merseyside-based Speedy Hire said it would buy OHP, based in Crewe, for an initial fee of £1.5million, and take on around £1.7million in debt.

Shares lifted 5 per cent, or 2p to 38.8p.  

09:40: A lack of data, company results and little steer from Asia overnight meant the Footsie has had a lacklustre start to the week.

In early trading the FTSE 100 index has turned down 90.8 points at 5,757.1, after initially making brief gains at the opening bell.

Due to the lack of activity overnight in Asia, traders have had little to sink their teeth into this morning. As a result the strong US jobs figure from last Friday still lingers over the markets and sentiment is being damaged by the likelihood of a March rate hike from the Federal Reserve. 

Investors are therefore in wait-and-see mode ahead of Janet Yellen's testimony to lawmakers on Wednesday, anxious for hints about which way the Fed chair will go next month.

Markets are also being hampered by the fact that bourses in China will be closed for most of this week for New Year, with only Japan and Australia remaining open. 

Holiday: Many traders have expressed relief that Chinese bourses are closed for the country's New Year given the volatility its stock markets have caused since January   

IG Markets' Evan Lucas, said: 'Lunar New Year means there is an eerie quiet, with only Japan and Australia open for business for most of the week. 

'Volumes will be well below average and there tends to be a build-up of global leads that is released once Asian investors return to their desk - expect 'release valve' trading late in the week.' 

In London losses were being led by blue chip giants WPP and Rolls Royce.

Rolls Royce is being hurt by news that management is set to meet on Thursday to discuss the extent of its first dividend cut in more than 20 years.

Its shares have fallen 3.4 per cent, or 18.0p, at 511.0p. 

Meanwhile WPP received a downgrade this morning from Investec, which believes the business will be hit by the economic slowdowns in China and Brazil.

WPP shares are down 46.0p at 1,371.0p. 

In better news miners are propping up the top of table, being led by Rio Tinto, Glencore and Rangold Resources.

Oil prices have helped, with Brent crude and US crude up 0.2 per cent. 

Randgold Resources chief executive Mark Bristow described 2015 as one of the best years in the company's history.

The gold miner said profits in the three months to the end of December rose to £53.52million, up from £48.76million for the quarter in 2014. 

Production set a new record of more than 1.2 million ounces, up 6 per cent year-on-year, the company added.

It also said it could generate cash flows at gold prices well below the $1 000/oz level. 

Stocks in focus in London include: 

BT: The telecoms firm has started to look for a new finance director to replace Tony Chanmugam but that no formal decision had been taken on a replacement or when the change would be made.

HSBC: There are reports that bank giant will decide in the next couple of days whether to shift its London headquarters overseas.

UK company news scheduled today includes: 

Interim results: Randgold Resources 

Economic news scheduled today includes: 

German industrial production at 7am