US indices saw the worst decline since 9/11 yesterday, wiping out $600 billion in market value in a single session.

The biggest fall in 10 years in the main Chinese index yesterday has led to widespread losses across global stock markets. Major global stock indices had their worst falls in many months yesterday as they gave up all the gains from earlier this year.

In China, the Shanghai composite index tumbled nearly 9 per cent yesterday after market regulators warned of steps to curb excessive speculation. Reports indicated that they were mulling a range of steps to prevent "illegal share offerings" and other undesirable activities in the Chinese stock markets.

The mainland Chinese indices were the best performers among all major global indices in recent months. Massive flows of both overseas and domestic money had lifted the indices to record highs as traders and investors betted on sustained Chinese growth. Though the Chinese indices had faced considerable volatility earlier this month, they recovered to touch new highs last Monday.

Yesterday's Chinese meltdown led to a sell-off in other Asian markets as well.

Malaysia lost 2.8 per cent and Singapore crashed 2.3 per cent yesterday. Hong Kong ended 1.75 per cent lower while Indonesia and South Korea ended with losses of well over a per cent each. The sell-off spread to Europe as most major indices ended with substantial losses. London lost 2.3 per cent, Frankfurt dropped 2.95 per cent and Paris gave up 3 per cent yesterday.

On Wall Street, the Dow index was down more than 500 points at one point which triggered trading restrictions yesterday. The systems struggled to cope with the volatility and for some time the index calculations were delayed. The Dow finally closed 416 points or 3.29 per cent lower while the S&P 500 index slipped 3.47 per cent. NASDAQ index closed 3.86 per cent lower.

US market sentiment was further weakened by disappointing economic data which led to fears that the US economy may slow down appreciably. Data released yesterday indicated a sharper than expected fall in orders for durables which indicates a slowdown in corporate demand. There are also reports of US housing prices declining further, which dampened hopes of an early recovery in the US housing sector.

Former US Fed chairman Alan Greenspan might have retired many months ago, but his influence over global financial markets remains undiminished. Traders continue to wait for his analysis and views on the economy, which have become much easier to comprehend ever since he retired.

On Monday, Greenspan warned that the US economy may be headed for a recession as early as this year end. This is in stark contrast to what his successor Ben Bernanke has been maintaining ever since he assumed office.

The economic data released yesterday seemed to support Greenspan's views on the economy and unnerved traders even further. This came even as a section of economists have started believing that the Fed may be forced to go in for further rate hikes to reign in inflationary pressures even as financial markets have been betting on an early cut in interest rates.

Among major emerging markets, Brazil crashed 6.6 per cent, Turkey lost 4.5 per cent and Russia ended 3.3 per cent lower yesterday.

Asian markets have lost substantially in morning trades today as well. Singapore and Malaysia are seeing the worst declines and have lost close to 6 per cent each. Philippines is the worst performer with losses of nearly 8 per cent.

In Japan, the Nikkei tumbled more than 700 points in early trades and is now trading 3.5 per cent lower. Hong Kong and Indonesia have lost around 3 per cent each. Shanghai has stabilised after a weak start today and is now trading with modest gains.

Indian indices have opened sharply lower today, following the global meltdown. The market was already edgy before the budget and much would depend on the budget proposals which would be announced later today. The Sensex tumbled more than 500 points and slipped below 13000 before recovering some ground. The Nifty lost nearly 180 points in early trades and touched a low of 3675. Both indices are now trading with losses of close to 3 per cent each.