LONDON -- Stock markets around the world plunged Monday after a new blast of currency turbulence in Europe, and increasing gloom about prospects for a U. S. economic recovery rattled investors on both sides of the Atlantic.


The pound plummeted to another record low against the surging Deutsche mark, helping to push London stocks into their biggest one-day fall of 1992.


Stocks slipped almost as dramatically on Wall Street. The Dow Jones industrial average lost 100 points in morning trading, its biggest dive of the year, before recovering to close 21. 61 points lower at 3, 179. 00, based on early and unofficial data.


"People are finally giving up", one New York analyst said. "People are deciding that we're not going to get a turnaround any time soon".


Wall Street investors were unnerved by uncertainty over the economy, corporate earnings and the upcoming Nov. 3 presidential and congressional elections.


Analysts in New York viewed the Dow's decline as a continuation of Friday's downturn, when the average fell 53. 76 points.


"Confidence is contracting faster than the economy is growing", said Alan Ackerman, executive vice president of Reich and Co.


Along with London, the Paris bourse also hit a low for 1992. Stocks in Frankfurt fell to a 20-month low and markets tumbled in Tokyo, Zurich and Sydney.


The Italian lira and Spanish peseta also could not withstand the surge of German currency. The pound dropped in London trading to 2. 3914 marks, nearly 5 pfennigs lower than Friday's close.


The pound has fallen more than 19 percent from its central rate in the European Community's Exchange Rate Mechanism, which it left on Sept. 16.


The signals moving the markets often seemed confused. Rumors of lower British and U. S. interest rates helped depress the dollar and the pound, but the fall in London stocks was partly fueled by talk that British rates might have to rise to protect the pound.


"We've seen some major capital flows across Europe", a London currency trader said. "People are deserting the pound and lira in droves and are selling the weaker ERM currencies, including the French franc".


The economic turmoil has piled political pressure on John Major, the British prime minister.


Traders saw no floor for the British currency unless the Conservative government, which is facing its annual party conference this week, could convince the market it had a coherent strategy.


"There is no reason to buy sterling - not for interest-rate, economic or political reasons", a Frankfurt currency dealer said.


Here is how major markets closed on Monday:


o The Financial Times-Stock Exchange index of 100 leading shares lost 103. 4 points to close at 2, 446. 3.


o The Paris bourse lost about 6 percent in a panicky atmosphere and the 40-share CAC index finished 72. 30 points down at 1, 611. 04, its lowest close of 1992.


o German shares fell 3. 6 percent to their lowest close since Jan. 31, 1991, brought down by the declines on bigger overseas markets and worries over high German interest rates and the plunges in foreign currencies. The 30-share DAX index ended 53. 64 points down at 1, 424. 4.


o The 225-share Nikkei average closed down 222. 57 points or 1. 28 percent at 17, 101. 50, with about 180 million shares traded.


o Gold, a traditional investment's troubled times, closed in London more than $3 higher at $351. 85 an ounce.


(Reuters, AP)