Around £60 billion was wiped off the value of leading firms today as the FTSE 100 Index plunged more than 4% amid fears of a US recession.

The Footsie dropped 250.1 points to 5647.8 by lunchtime, hitting its lowest levels for nearly 18 months.

At one point the index was down 329 points - or nearly 6% - more than the drop triggered by the September 11 terrorist attacks in 2001.

The fall continues an unprecedented slide in London's top flight index this year amid a gloomy outlook for economies across the world. Other markets in Europe have also plunged more than 5% on the back of the poor sentiment.

Shares in London fell after Asian markets dropped up to 4% overnight, and following falls in New York for the Dow Jones Industrial Average.

Investors across the Atlantic were left unimpressed by President George Bush's plans to stimulate the all-important US economy.

The Footsie is now down nearly 12% on the opening mark of 6456.9 this year -the worst start to a year since records began in 1936.

Richard Hunter, head of UK equities at broker Hargreaves Lansdown, said investors in London were "battening down the hatches" as US recession fears gripped the market.

He said: "People aren't buying the US bail out story, and that feeling has been exacerbated by the weakness overnight in the Asian markets.

"The other thing we have seen today is a lack of buying interest - people are battening down the hatches while they see what happens in the US."

Last week the Footsie dipped below the 6,000 barrier for the first time since the start of the credit crunch in August.

The CAC-40 in Paris was down more than 5% today and the Dax in Frankfurt was down almost 5% as they digested the news from across the Atlantic.

On Friday, President Bush unveiled plans for a special package of measures worth billions of dollars to help avoid a downturn in the US economy.

He said the growth package would have to be big enough to make a difference to the "large and dynamic" US economy.

Analysts are worried that the tax breaks and spending measures will do little to boost consumer spending in the US because of problems in the housing market.