Global markets have been volatile in early trading, after Chinese shares dropped nearly 9 percent overnight to 3 year lows.

Investors are growing increasingly worried about trouble in the world’s second biggest economy. London’s FTSE 100 was down by 2.5 percent in early trade, while major markets in France and Germany also opened down by more than 3 percent.

This news was coupled with a sharp drop in the price of the dollar and major commodities.

Copper fell 2.5 percent, hitting a six-year low of $4,920 a tonne, and nickel slid 4.6 percent to its lowest since 2009 at $9,730 a tonne.

Takako Masai, head of research at Shinsei Bank in Tokyo told Reuters: “Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable”.

Oil prices have also slumped to six year lows, with U.S. crude was down 3 percent at $39.20 a barrel, while Brent lost 2.4 percent to $44.40 a barrel.

Beijing announced plans this morning to allow its main state pension fund to invest in the stock market, as part of a series of measures designed to stabilise the markets. Earlier this month China made a surprise move by devaluing the yuan to increase exports.

Over the past week, the Shanghai index fell 12%, adding up to a 30% drop since the middle of June.