Australian shares have cratered, recording the steepest fall in what is already a dismal year, dragging the value of the main share index below $1 trillion as the market headed for its worst week since the 1987 collapse.
The S&P/ASX200 index fell as much as 8pc in mid-afternoon trading, losing 344.8 points to plunge to 3976.1.
That's the lowest point since May 17, 2005. The dive eclipses the 7.1pc slump on January 22 this year.
In mid-afternoon trading, the index struggled to remain above 4000, declining even further to 3.981points.
"No one who is alive has seen anything like this before," said James McGlew of Argonaut Securities. "There is nowhere to hide."
"This is the greatest economic shock that has happened to capitalism," he said.
Dow Jones index futures are pointing to more falls in New York when markets open there tonight, with the index pointing to a fall of about 2.8pc.
Today's plunge means about 15pc of the market's value has been obliterated this week alone, about thrice the scale of the losses in the week after the 9/11 terrorist attacks in the US.
Even with the dramatic size of this week's plunge, the drop is about half that of the week ending October 23, 1987 when the All Ordinaries Index lost 29pc of its value.
Australia's falls were sparked by a late collapse of investor confidence on Wall Street, which left the main US indexes down more than 7pc.
That decline cascaded across Asian markets, with Japan's Nikkei 225 down as much as 11pc, Hong Kong's Hang Seng down 8pc, and Korea's Kospi down 9pc. Singapore's Straits Times index was off 7pc while New Zealand's top 50 companies were down 3.7pc.
Investors are showing few signs of confidence that the slew of rate cuts by central banks this week, including Australia's, and bank rescues will be enough to stem the rout.
G20 finance ministers are gathering in Washington to prepare for a weekend of talks to strengthen coordination between governments in their efforts to restore calm for investors. A key challenge is finding a way to revive confidence among banks so that clogged credit markets are re-opened.
"Overall, what we face is a broader problem of a lack of a demonstration of global and coordinated political will to deal with some of the big regulatory challenges that we now face," Prime Minister Kevin Rudd said.
His counterpart, Opposition Leader Malcolm Turnbull has called for action including the delay of a proprosed emissions trading scheme set for a 2010 start date.
Governments should consider buying stock on sharemarkets to stop the rot and restore some confidence, CommSec chief equities economist Craig James, told AAP.
Mr James said investors were standing back, not wanting to buy in the belief that stocks would become even cheaper. As a result, desperate measures are needed to stabilise share markets.
ANZ economist Katie Dean said the downturn "is potentially quite long-lasting with the impact to the real economy only starting to be felt".
"At this stage investors aren't confident that what central banks and governments are doing will be enough to avert what will be a fairly big global recession."
Among stocks to fall were BHP Billiton, which was down as much as $2.79, or 9.4pc, to $27.05. Rio Tinto was off another $6.90, or 8.9pc, to $71.11. Fortescue Metals is down as much as 60 cents, or 18.2pc, to $2.70.
The Commonwealth Bank was down as much as $3.26, or 7.7pc, at $39.14. while ANZ lost $1.15, or 6.9pc, to $15.50.
Westpac was down as much as $1.65, or 7.7pc, to $19.85 and NAB lost as much as $2.03, or 8.55pc, to $21.70.
Macquarie Group sank $3.80, or 12.1pc, to $27.70. Babcock & Brown lost as much as 13 cents, or 12pc, to 94 cents.
The Aussie dollar lost about 4 US cents in morning trade, and recently traded at US66.55 cents. It fell even more against the yen, trading recently at 65.82 yen.
"We're seeing the Australian dollar a lot weaker this morning on the back of equities market and rising risk aversion," said TD Securities senior strategist Joshua Williamson.
Japanese investors are moving money back into yen today, after having "tested the waters" with the Australian dollar yesterday.
"That's really hit the Aussie hard."
Mr Williamson said hedge funds had also been selling out of the Australian dollar, which is seen as a riskier currency because of the local economy's links to commodities prices.
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