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Dow futures sink 330 points as Wall Street preps for meltdown

U.S. stock index futures screamed lower, with Dow futures tumbling as much as 350 points, as fears surrounding the health of China's economy multiplied.

These concerns saw the benchmark Shanghai Composite index notch up its biggest one-day percentage loss since 2007 on Monday, closing down 8.5 percent.

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Panic spread to European markets, with the pan-European FTSEurofirst 300 as much as 3 percent in early London trading. All major bourses were off a similar amount. The index has shed over $1 trillion in market value in August so far.

The slide comes after U.S. stocks closed deep in the red on Friday, pushing the Dow and Nasdaq into correction territory.The major averages had their biggest trade volume day of the year and posted their worst week in four years.

Oil prices crashed to fresh six and half year lows on Monday, after Chinese stock markets suffered, intensifying worries over the outlook for global oil demand.

Brent oil was trading down 4.6 percent, at $43.36 a barrel. U.S. October crude was down 4.1 percent at $38.80 a barrel.

"Markets are afraid of further economic weakness in China, further pain in global commodity markets and uncertain about Fed and People's Bank of China policy—what they will do and what the impact will be," said global strategist at Societe Generale, Kit Juckes.

"The divergence between global commodity prices and equities is not a new theme but the danger now is that they begin to re-correlate—as they did when the dotcom bubble burst in 2000 and what had previously been an emerging market crisis became a U.S. recession."

No major earnings or economic data are expected from the U.S. on Monday.

While traders will be pre-occupied with the extreme moves in global markets, elsewhere the coming week's annual Economic Policy Symposium at Jackson Hole, which brings together academics, financial market participants and many of the world's leading central bankers, could provide important signals as to near-term monetary policy action in the U.S.

In addition, Federal Reserve Vice-Chairman Stanley Fischer will speak later this week.

Thursday will brings this week's data highlight, with the second reading of second quarter gross domestic product (GDP).

Some important housing data is also due for release throughout the week, including the release on Tuesday of the FHFA and Case-Shiller home price indices and new home sales figures, followed on Thursday by pending home sales data.

Meanwhile, safe haven assets have rallied around the world, with gold and U.S. Treasurys both seeing strong gains in the last two weeks.

In currency markets, the yen and Swiss Franc have rallied against the U.S. dollar while the euro has proved the surprise outperformer, appreciating 4.5 percent against the greenback in the last two weeks.