US Markets Slump After Chinese Stock Rout

The US stock market rebounded slightly following an early trading plunge in the wake of a big drop in Chinese stocks.

The Dow Jones industrial average ended the day down 588 points, or 3.6%, after falling more than 1,000 points - 4.8% - within the first 10 minutes of trading on Monday morning.

The Standard & Poor's 500 index dropped 78 points - 3.9% - to 1,893, while the NASDAQ composite fell 180 points, or 3.8%.

Driven by growing fears about a slowdown in China, the US stock market suffered its biggest one-day drop in nearly four years on Friday.

A big sell-off in Chinese stock on Monday caused the rout to continue.

In London the FTSE 100 plunged by 4.7% - its worst day in six years .

The drops were sparked by fresh evidence that the world's second-largest economy was losing more momentum than had been expected.

The Shanghai Composite tumbled 8.5% on Monday, having lost more than 10% already this month, leaving China's top index back at the level it started the year.

Bernard Aw, market strategist at IG (LSE: IGG.L - news) , said: "There is a lot of fear in the markets."

Emerging markets such as Egypt, Dubai and Saudi Arabia all saw declines over the weekend.

White House spokesman Josh Earnest said President Barack Obama had been briefed and the US Treasury was monitoring the global financial markets.

Mr Earnest said US officials continue to urge China to pursue financial reforms, including moving toward a more market-driven exchange rate for its currency.