Spain's IBEX 35 stock index recorded its worst fall since March 2023 on Monday amid widespread fears that the US is heading for recession, on a day when Japan's Nikkei plunged 12%, its worst session since 1987.

Weak US jobs data released on Friday and a string of worse-than-expected corporate earnings results for technology companies triggered widespread selling in stock markets as confidence in the economy fell.

"This bad (employment) data has only increased fears of a hard landing of the U.S. economy and, therefore, that the Fed is late to avoid an excessive slowdown with significant damage to employment," pointed out the Renta 4 brokerage house.

The fall of the Nikkei not only occurred after the weak US data, but also because the appreciation of the yen against the dollar spread the fear that investments financed when the yen was cheap could be unwound.

As it was, trader sentiment quickly turned around and markets now project a more than 70% chance that the US Federal Reserve will cut rates by 50 basis points in September, down from 11.5% a week earlier, according to CME's FedWatch tool.

Pessimism has spread and analysts at Goldman Sachs now put the 12-month recession odds at 25%, while those at JP Morgan believe the odds are 50%.

Rate cut estimates are also affecting other central banks and markets expect the European Central Bank to cut rates by 67 basis points before the end of the year.

Analysts at Santander pointed to widespread panic and wondered whether today's session could be a "Black Monday".

Today, investors will also be watching the release of the July PMI indices for the Eurozone, Germany, France, Spain and the US, as well as the US services ISM.

At 0716 GMT on Monday, the Spanish selective stock market index IBEX 35 fell 307.50 points, or 2.88%, to 10,365.40 points, while the FTSE Eurofirst 300 index of large European stocks fell 3.04%.

This was the IBEX's worst fall since March 15, 2023.

In the banking sector, Santander lost 4.17%, BBVA fell 3.52%, Caixabank gave up 3.05%, Sabadell fell 4.73%, Bankinter dropped 1.83% and Unicaja Banco lost 3.57%.

Among the large non-financial stocks, Telefónica fell 2.33%, Inditex dropped 2.74%, Iberdrola dropped 1.54%, Cellnex fell 1.66%, and the oil company Repsol lost 2.85%.

(Information by Javi West Larrañaga; edited by Benjamín Mejías Valencia).