Turmoil sweeps the globe

Brazil, Latin America's largest economy, was forced to stop trading twice in its financial capital, Sao Paulo, first when the Bovespa index declined 10% and then when it fell 5% further, tripping so-called circuit breakers. It eventually rallied to close down about 5%. The Brazilian real slid to its lowest level in more than a year against the dollar, mirroring similar devaluations for other world currencies including the euro, which fell below $1.35; in July it was trading around $1.60.

In recent years, Brazil and Argentina have enjoyed windfall profits from the sale of soybeans, beef and other commodities. Mineral exports have spurred rapid growth in Chile and Peru. But the credit squeeze could pinch global demand for commodities.

"Brazil is going to pay the price for being part of the world," former Brazilian Finance Minister Delfim Netto told the InvestNews website.

In Mexico, the IPC index slid 5.4% as traders blamed volatility for a sharp drop in the peso, which fell to 11.8 to the U.S. dollar -- its lowest level since 1993.

Russia's RTS index posted its largest one-day loss Monday since trading began in 1995; the drop was partly the result of slumping oil prices. Deputy Economic Development Minister Andrei Klepach warned that the government's recent projection of $30 billion in capital inflow this year could dwindle to nothing.

Stocks also dived in Saudi Arabia and other Persian Gulf states that have witnessed big building booms in recent years. Real estate shares in Dubai, United Arab Emirates, at special risk because the kingdom's growth has been fueled more by residential and commercial development than by its oil supplies, closed down 7%.

In Asia, Japan's Nikkei 225 index lost 4.3% on Monday to close at its lowest level since February 2004. Japanese financial companies and industries dependent on exports, such as steel, were hit particularly hard. The Shanghai composite index fell 5.2%.

Like workers scurrying to plug holes in dikes, European governments spent part of Monday shoring up wobbly banks.

After its first attempt at a bailout collapsed, the German government brokered a $68-billion deal with its finance industry to save Hypo Real Estate Holding, one of the country's largest lenders.

In Brussels, the hastily put-together acquisition of Belgium's Fortis bank by French giant BNP Paribas over the weekend failed to calm jitters over French-Belgian bank Dexia, whose shares plunged about 20%.