European stock markets suffered another rout territory as the historic Brexit referendum last week continued to cast a shadow over global financial markets.

Monday's loss followed a 7% slide on Friday, when the pan-European benchmark posted its worst session since October 2008-in the wake of the Lehman Brothers bankruptcy-after the U.K. voted to leave the European Union.

The U.K.'s FTSE 100 index UKX, -2.55% slid 2.6% to 5,982.20 on Monday, with the banks posting some of the biggest losses. Traders also continued to dump the pound GBPUSD, +0.5142% sending sterling down to a fresh 31-year low at $1.3121, from $1.3676 late Friday in New York. The currency had momentarily steadied Monday morning after U.K. finance minister George Osborne stressed the country is strong enough to deal with the coming challenges.

U.S. stocks posted a second sharp daily loss Monday as investors continued to dump assets perceived as risky in the wake of the U.K.'s vote last week to leave the European Union.

The S&P 500 SPX, -1.81% closed 36.87 points lower, a loss of 1.8%, at 2,000.55, with eight of its 10 sectors in negative territory. The index trimmed its decline from an earlier 46-point deficit and narrowly avoided closing below 2,000. The last time the index closed below 2,000 was March 10.

The Dow Jones Industrial Average DJIA, -1.50% dropped 260.51 points, or 1.5%, to close at 17,140.24, led by a 4% loss in shares of American Express Co. AXP, -3.98% Earlier, the average was off by as many as 337 points.

Meanwhile, the Nasdaq Composite COMP, -2.41% lost 113.54 points, or 2.4%, to close at 4,594.44, following an earlier 134-point deficit.

June 28 Japanese stocks weakened in volatile trade on Tuesday morning, with automakers leading the declines on growing worries about the global economic fallout from Britain's vote to leave the European Union.

Japanese automakers underperformed, with the transport equipment sector falling 2.6 percent, the third worst performer on the board.

Toyota Motor Corp dropped 3.2 percent and Honda Motor Co shed 1.5 percent, while Mazda Motor Corp tumbled 4.7 percent.