The US stock market has suffered its biggest one-day drop in nearly four years, driven by growing fears about a slowdown in China.

The Dow Jones industrial average tumbled by 530.94 points, or 3.1%, to 16,459.75 - below the psychologically important 17,000 points.

It comes after a day of big losses abroad - the FTSE 100 in London ended the week 2.8% down, Germany's DAX fell 2.9% and the Shanghai Composite in China dropped 4.3%.

Tokyo's Nikkei 225 index plunged 3% and Hong Kong's Hang Seng Index fell 1.5%.

Markets began falling last week after China announced a surprise devaluation of its currency, the yuan.

The move by the People's Bank of China has shaken equity markets with commodity stocks coming under intense pressure.

Investors saw it as a sign that the world's second largest economy could be showing signs of slowing down.

That was followed by more bad news for the markets after a survey showed the manufacturing sector on the Chinese mainland continued to shrink.

The global losses reflect concern over falling oil prices, which have dropped below $40 per barrel of crude - the lowest price since the global economic crisis - as worldwide oil supplies continue to outpace demand.

And the ongoing uncertainty over the timing of the US Federal Reserve’s long-awaited interest rate hike is compounding the problem, experts said.

Some analysts said the market's dip this week does not necessarily signal that stocks are entering long-term decline.

Indicators in the US economy have been mostly positive in recent months - but some investors have feared that the stock market may have jumped ahead of economic growth.

Many experts say this may be the long-awaited "correction" some market analysts have been looking for.

Some believe it could be an opportunity for some investors to pick up cheap stocks in order to make a profit in the months ahead.