Bursa Malaysia saw panic selling this morning causing the stock market to shed as much as 101.07 points to 1,136.01 - the biggest fall in recent history - before recovering to close at 1,196.45.

The Kuala Lumpur Composite Index (KLCI) staged a late recovery, supported by strong buying from some institutional funds when the stock exchange reopened after lunch.

Still, the index fell by 40.63 points, or 3.28 percent - the second day in a row in which KLCI was hit by significant losses.

Yesterday, it shed 2.8 percent, closing at 1,237.08. The fall wiped out RM38 billion in market value of listed companies, while today it amounted to RM31.07 billion.

The last time the KLCI had its biggest single day loss was five years ago - on Sept 21, 2001 when it declined 3.5 percent.

Wall Street in tailspin

According to Bernama, the panic selling was triggered by the big losses on Wall Street overnight following the nearly nine percent fall in Shanghai stock market yesterday.

The Dow Jones index was in a tailspin yesterday, falling a whopping 416.02 points at 12,216.24 - a drop of nearly 3.3 percent.

This was the biggest fall since the September 11, 2001 terrorist attacks, and it erased US$600 billion in market value from listed companies.

All the regional bourses were down today, continuing yesterday's trend, triggered by renewed concern over the slowdown in the US and China economies.