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London - Britain battled to stop worldwide Brexit alarm on Monday but failed to prevent the pound crumbling to a three-decade low against the dollar as European shares took a fresh plunge.
Asian markets had steadied a little after Britain's June 23 vote to abandon the European Union wiped $2.1trn off international equity values Friday.
But investors started a new wave of selling in European trade as they grappled with the financial consequences of the Brexit referendum.
"Today I want to reassure the British people, and the global community, that Britain is ready to confront what the future holds for us from a position of strength," Britain's finance minister, George Osborne, declared before European financial markets opened.
Britain's economy is "as strong as could be", the minister said.
Hours later, the pound had skidded to $1.3194 in London trade, its lowest level against the dollar since September 1985.
London's FTSE 100 index, which boasts many international companies, fell 1.6% in morning trade, masking steeper falls in key sectors likely to be affected by Brexit.
"George Osborne's comments have clearly prevented a much more dramatic decline Monday morning, but markets will remain incredibly volatile throughout the long-winded process of exiting the EU," said Interactive Investor equity strategist Lee Wild in London.
British budget airline EasyJet, which warned of a Brexit hit to sales, plunged by nearly 19%. International Airlines Group, parent of British Airways and Iberia, dropped nearly 10%.
Royal Bank of Scotland shares slumped 18%. Lloyds Banking Group fell 10%.
British construction group Taylor Wimpey tumbled nearly 16%.
One fifth of British business leaders are considering moving operations abroad after the referendum, according to a survey from leading business lobby group, the Institute of Directors.
"Any sense of calm is very fragile and the situation could change rapidly," said Joe Rundle, head of trading at ETX Capital.
In eurozone equity trading, Frankfurt's DAX 30 index slumped 2.0% as the country's biggest lender Deutsche Bank slid nearly 9%. The CAC 40 in Paris shed 1.8%.
In Madrid, shares fell 1.5%, frittering away early gains after the ruling conservative Popular Party emerged on top in elections Sunday and vowed to try to form a government.
Stephen Innes, senior trader at OANDA Asia Pacific, warned sterling "is extremely vulnerable" and predicted an interest rate cut in the summer.
He also said there was "a huge concern that London's status as the global financial capital will crumble" if it loses its "passporting" rights, which permit banks to locate themselves in Britain while offering products and services in the wider EU.
In Asian trade, Tokyo, Shanghai and Sydney markets advanced. Hong Kong slipped, however.
There are fears the British vote will usher in another global market rout just months after a China-fuelled sell-off at the start of the year.
Morgan Stanley economist Chetan Ahya tipped a new round of monetary easing in Asia to limit the fallout.
"We think near-term focus of policymakers will be to mitigate adverse impacts on financial conditions. Specifically, we expect policymakers to introduce liquidity injections measures," he said.
Japanese Prime Minister Shinzo Abe held an emergency meeting with top officials Monday morning to discuss how to deal with the market fallout.
"It is going to be a very tough week," predicted James Audiss, senior investment adviser at Shaw and Partners in Sydney.
"Unless an investor has a really strong view one way or the other, you'd be brave to buy in. It will be a really volatile week," he said.
Chinese Premier Li Keqiang said Britain's departure from the EU created new uncertainties in the world economy at a time when downward pressures on China's economy are mounting.
