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Political leaders failed to halt a global stock market rout that gathered steam on Monday as investors lost confidence that Europe and the United States can rein in their budgets quickly and fear spread of a double-dip recession. The European Central Bank swept into the bond market to buy up Italian and Spanish debt and sling a safety net under the euro zone's third and fourth largest economies. But bickering persisted in Europe over a longer-term rescue plan. In the United States, juicy couture President Barack Obama called for urgent action on the US budget deficit but his proposal on taxes was promptly rebuffed by Republicans. The G7 finance ministers' and central bankers' pledge on Sunday to help smooth markets if needed provided little solace. Selling that began in Asia and Europe accelerated in the United States, where the broad Standard and Poor's 500 index plunged 6.7 per cent to close at 1,119.46, its worst sell-off since Dec. 1, 2008. The Dow Jones shed 634.76 points to 10,809.85. A huge blow to investor confidence was the Standard and Poor's downgrade of the US sovereign credit rating late Friday, which compounded spreading concerns that the worsening euro-zone debt crisis and a faltering US economy heighten the risks of a double-dip recession. "People are asking, can the economy still grow in face of all this?" said John Carey, portfolio manager at Pioneer Investment Management in Boston, with $US260 billion under management. Realisation on both sides of the Atlantic that the political obstacles to quick budgetary reform are so huge and the monetary options so limited, it has deepened the pessimism. The worsening market turmoil puts significant pressure on the US Federal Reserve at its regular policy meeting on Tuesday to announce some fresh measures of support for a damaged US economy. ‘‘If the Fed does nothing, it could prove to be a disappointment at this point," said JP Morgan analysts. Stock losses have wiped more than $US3.8 trillion from investor wealth globally in the last eight days and sent investors rushing for safety in the Swiss franc, the Japanese yen and gold. In the United States, estimates of recession risks are rising. Goldman Sachs had put them at one in three last week, before the latest sell-off. "This massive move in the equity market does dim the economic outlook for the next six months," said Carl Riccadonna, senior US economist at Deutsche Bank in New York. ‘‘We would put the recession odds at about 40 per cent and about two weeks ago they were at about a 10 per cent chance." The G7 financial policymakers from major industrialized nations said on Sunday they stand ready to provide extra cash if markets seize up, are consulting regularly and could cooperate to smooth volatile FX markets if needed. Particularly worrisome was a more than 20 per cent plunge in the shares of Bank of America, the largest US bank. AIG sued it for $US10 billion for allegedly deceiving investors, on top of mounting concerns about the size of its potential losses from mortgages litigation and questions about management. The bank has shed nearly one third of its market value in three days.