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© RIA Novosti. Alexey Panov
MICEX
The Russian stock market extended losses on Tuesday and the ruble plunged against the dollar and the euro for a second consecutive day over fears that the U.S. economy was in danger of going back into recession.

The dollar-denominated RTS stock exchange index lost 7.03 percent by 13:20 Moscow time to 1,541.20, falling well below the psychologically important 1,600 point level. The RTS closed 7.84 percent lower on Monday at 1,657.77 for the first time since December 10, 2010.

The ruble-denominated MICEX index fell 4.94 percent to 1,425.65 as of 13:20 Moscow time after a 5.5 percent slump on Monday.

The official ruble exchange rate plunged 89.56 kopecks against the dollar to 29.42. The currency fell nearly a ruble against the euro to 40.95.

"Technically, the current selloff is already overdone, and a bounce is totally in the cards (unless there is an imminent systemic freeze of the funding markets, which we continue to believe is within the authorities' capacity to prevent under a broad range of circumstances)," VTB Capital said in a research note.

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© RIA Novosti. Grigoriy Sysoev
RTS
"With the ruble now unhinged, we are reiterating our view that in the event of a sharp slowdown and declining commodity prices, a substantial part of the shock will be absorbed by the expedient exchange rate adjustment."

As of 08:50 GMT, London's FTSE 100 dropped 5 percent to 4,802.70, Frankfurt's Dax plunged 6.69 percent to 5,526.71, France's Cac 40 went down 4.36 percent to 3,182.53.

Analysts said the markets would watch the results of the Federal Reserve meeting on Tuesday, followed by a policy statement at around 19:15 GMT.

Global stocks have been tumbling since late Friday when S&P took the decision to cut the U.S. top rating by one notch to AA-plus over concerns about America's growing budget deficit.