UPDATED 7.52AM: Global stock markets have plunged and commodity prices have hit new lows, extending a Chinese-led rout, fed by fears of a damaging slowdown in the world's second-largest economy.

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Chinese stocks have tumbled since peaking in mid-June and authorities have launched broad interventions to try to restrain the drops, but Beijing's latest market intervention has failed to restore confidence.

Several European markets sank more than seven per cent in afternoon trades on Monday, while US stocks tumbled at the open with the Dow dropping more than three per cent.

China-linked shares again led the stocks sell-off, with Shanghai closing down 8.49 per cent, the biggest daily loss since February 27, 2007.

Falling oil prices also weighed on market sentiment as they slid below $US40 a barrel for the first time since 2009, after weak Chinese manufacturing data deepened fears that the Asian giant is growing more slowly than thought

Global equities have lost more than $US5 trillion since China's shock currency devaluation on August 11.

At mid-afternoon, Frankfurt's blue-chip DAX 30 index was down 6.79 per cent at 9,537.91 points, while the CAC 40 in Paris trading dropped 6.57 per cent to 4,329.12 after earlier sinking more than eight per cent.

London's benchmark FTSE 100 index of leading companies lost 5.02 per cent to stand at 5,877.01 compared with Friday's close.

About 15 minutes into trade on Wall Street, the Dow Jones Industrial Average lost 3.30 per cent - a more than 1000 point drop from the opening level - before recovering somewhat.

The broad-based S&P 500 sank 3.18 per cent, while the tech-rich Nasdaq Composite Index fell 3.84 per cent to 4,525.38.

Other European markets that dropped more than five per cent by mid-afternoon included Amsterdam, Brussels, Milan and Madrid. Oslo's commodities heavy index nosedived more than seven per cent.

Crisis-hit Greece's main stock market plummeted more than 11 per cent, succumbing to a Chinese-led sell-off and also domestic political uncertainty ahead of likely elections next month.

The euro meanwhile strengthened to $US1.1599 from $US1.1386 on Friday.

Russia's rouble also hit a new 2015 low and stocks sank, battered by falling oil prices and the impact of sanctions over Ukraine.

Data on Friday showing Chinese manufacturing activity slowed to a 77-month low had added to the gloom, signalling that even a campaign by Beijing with its vast arsenal of reserves has not been able to stimulate growth.

In other top Asian markets, Hong Kong's benchmark fell 5.17 per cent, Tokyo 4.61 per cent, and Sydney lost 4.09 per cent.

More than 800 stocks listed in Shanghai fell by their maximum 10 per cent daily limit, among them many of the brokerages that spurred a year-long rally that saw shares soar 150 per cent before they collapsed in June.

Chinese authorities have since launched unprecedented measures to support stocks. On Sunday state media said the huge national pension fund would now be allowed to buy equities, in a fresh bid to prop up the market.

But local investors fear even Beijing's huge firepower will not be enough to stop the rout in Chinese shares, particularly after the benchmark Shanghai index fell through the key 3500 point mark.