The global rout in stock markets has deepened as Japan’s benchmark index suffered its worst day since Black Monday amid fears of a US recession.

Tokyo’s Nikkei 225 closed down 12.4pc and suffered biggest ever points loss overnight - also taking its worst hammering in one day since the fateful trading session in October 1987. 

The index is heading for its worst two-day decline on record after dropping 5.9pc on Friday as investors sold heavily over worries the American economy may be in worse shape than had been expected.

European and US markets are expected to follow suit when trading begins later as investors raced to put their money into safe havens like the yen and Swiss franc.

Weaker than expected jobs and manufacturing figures in the US have raised concerns that the Federal Reserve has left it too late to begin cutting interest rates without damaging the world’s largest economy.

Tan Boon Heng of Mizuho Bank in Singapore said: “The scenario of higher unemployment constraining spending and further restraining hiring and incomes and economic activity leading to a recession is the feared scenario here.” 

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