US shares have fallen sharply amid increasing concerns over the state of the world's economy.

In New York, the Dow Jones industrial average index dropped 679.95 points, or 7.7%, all but wiping out a 783-point gain built up last week.

Commodity and banking stocks have seen the steepest decline, after economic figures released Monday pointed towards a severe global slowdown.

Markets worldwide have been hit as the monthly index of US manufacturing activity plunged to a 26-year low - a figure worse than analysts expected.

An announcement was also made by the National Bureau of Economic...