LONDON: World stock markets slid further Monday on rising fears that Britain could vote to leave the European Union in next week's referendum, traders said.
Tokyo's main stocks index dived 3.5 percent to a two-month low point by the close Monday, as worries over Britain's EU membership vote sparked a rally in the safe haven yen currency, which in turn hammered shares in Japanese exporters.
Craig Erlam, senior market analyst at Oanda trading group, said "risk aversion" continued to drive markets ahead of "a number of key risk events".
"The UK referendum next week is right at the top of this list given the destabilisation effects that a vote to leave the EU could have on global markets," he said in a note to investors.
"Should the UK vote to leave the EU next week, it would be a massive test of the markets' ability to deal with a significant blow."
US shares followed suit, with Wall Street opening lower, but shares in professional networking company LinkedIn shot up nearly 48 percent on news of its $26.2 billion takeover by Microsoft.
In mid afternoon trading, London's FTSE 100 index was nearly one percent lower compared with Friday's close.
In the eurozone, Frankfurt's DAX 30 index and the CAC 40 in Paris were both more than 1.5 percent down. Milan stock market slumped three percent to its lowest level in four months, led by banking shares.
In foreign exchange, the British pound hit two-month lows against both the euro and dollar.
The European single currency meanwhile dropped to 119 yen, the lowest level since February 2013.
- Central banks awaited -
Markets are on edge also as the US, Japanese and British central banks meet this week, with investors worrying about global growth as well as the possible impact of Britain quitting the EU, as polls show that a Brexit is a real possibility.
"The international focus on Brexit has stepped up," Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand, said in a note to clients.
"Yay or nay is only part of the issue -- what we are seeing globally is more kickback from society toward integration and more anti-globalisation."
On Monday, Hong Kong's main stocks index tumbled 2.5 percent and Shanghai dived 3.2 percent, while Seoul sank 1.9 percent and Singapore 1.6 percent.
On Friday European markets dived after European Central Bank chief Mario Draghi called for action to boost the eurozone economy, in comments taken as a sign it is struggling in its battle against torpid growth.
His comments follow an indication from the US Federal Reserve that it was unlikely to lift US interest rates until the fourth quarter, while other central banks have either announced or are contemplating cuts.
For Oanda's Erlam, the Brexit risk is also playing a role in the Fed's timing.
"The Fed will meet this week and while the jobs report may have given them a reason to put off raising interest rates again, the closing of the gap ahead of the UK referendum is likely the real reason behind the delay," he said.
- Key figures at 1340 GMT -
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London - FTSE 100: DOWN 0.95 percent at 6,057.59 points
Frankfurt - DAX 30: DOWN 1.6 percent at 9,675.33
Paris - CAC 40: DOWN 1.5 percent at 4,242.66
EURO STOXX 50: DOWN 1.8 percent at 2,859.02
New York - DOW: DOWN 0.4 percent at 17,802.34
Tokyo - Nikkei 225: DOWN 3.5 percent at 16,019.18 (close)
Hong Kong - Hang Seng: DOWN 2.5 percent at 20,512.99 (close)
Shanghai - Composite: DOWN 3.2 percent at 2,833.07 (close)
Euro/dollar: UP at $1.1259 from $1.1251 late Friday
Dollar/yen: DOWN at 106.19 yen from 106.93 yen
Pound/dollar: DOWN at $1.4217 from $1.4250
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