MOSCOW – Russia's benchmark stock exchange suffered its biggest-ever one-day loss as shares went into free fall on the back of falling oil prices and deepening fears about the global economy despite the passage of a $700 billion U.S. bank bailout.

Trading on MICEX – the country's largest index– was shut down three times, closing down 18.6 percent to 752 points. The benchmark RTS – where trading was halted twice – crashed to its lowest point since August 2005, falling by 19.1 percent to 866.4 points. It is the most the RTS has fallen in one day.

“The mood is kind of disbelief. You'd think we would have gotten used to it by now,” said Ron Smith, strategist at Moscow-based Alfa Bank. “Traders are just sitting there staring at the screens and going 'wow'.”

“In this environment, nobody wants to step up to the table and buy a stock,” he added.

In September, growing financial turmoil in the United States and a wave of margin calls sent the Russian stock markets into their biggest downward spiral since 1998. The MICEX lost 25 percent in just three days, and prompted regulators to shut down the markets to stem the decline. They have since used that tool on several occasions when falls have become severe – to lesser effect.

Russia's stock market in recent years has boomed amid high prices for oil and natural gas. But the market began falling sharply in midsummer amid concerns about government interference with businesses, and the drop accelerated as the global economic crisis intensified. Oil prices, the backbone of Russia's economy, have been sharply down in recent days – dropping to under $90 a barrel – and investors have also been spooked by August's five-day war between Russia and Georgia. The RTS is now down by 64 percent from its May peak.

Banking stocks were among the worst hit on Monday in Russia. State-controlled Sberbank, the country's largest lender, shed 16.6 percent on MICEX, while the state-backed VTB banking concern shed 24.5 percent. Mining firm Norilsk Nickel plunged by 30.1 percent on the RTS amid weak financials and plummeting nickel prices. State-controlled oil major Rosneft was 24 percent lower.

Russia's shares tanked against a worsening global backdrop.

After trading closed for the weekend in Russia, the U.S. House of Representatives passed a $700 billion bailout plan at the second attempt. But it provided little relief to investors, who are focused on deepening financial woes in Europe that threaten to derail global growth.

Concerns have mounted in Europe amid a wave of state-backed bank bailouts, and a growing sense of dislocation of European-wide efforts to tackle the financial crisis – despite pledges from EU leaders to secure the stability of the financial system in a coordinated manner.

All major indexes in Europe suffered heavy falls in afternoon trading: The FTSE 100 dropped by 4.8 percent as of 1450GMT, Germany's DAX was down 7.2 percent and France's CAC-40 was at 8.4 percent lower.

“When it's cracking up that badly there, you are going to see extremely high data come in for a market like Russia,” said Smith. “The valuations (in Russia) haven't mattered for two months now, and they certainly don't at this point.”