LONDON (Reuters) - Investor fears that further possible coordinated action to calm markets will not be enough to fend off a global recession sent shares from London to Tokyo reeling on Monday, while the yen continued to surge.

The yen held firm even after the Group of Seven nations singled out as a cause for concern its excessive volatility, which has helped propel Japanese equities to their lowest in nearly 30 years.

The latest joint effort by the world’s major industrialized nations to stem the worst financial crisis in 80 years did little to convince that governments around the world can quench the turmoil that has ravaged markets, as investors rush to pull money out of any region or asset class with a hint of risk.

Emerging market equities took another pounding, falling to their lowest since September 2004 .MSCIEF. Emerging shares have lost more than 40 percent in October alone.

In Western Europe, shares on the FTSEurofirst 300 index .FTEU3 dropped nearly 4 percent by 1305 GMT, led by banking stocks and energy companies, which took a hit from oil prices tumbling to a 17-month low.

U.S. stock futures were down between 1.3 and 2.2 percent, suggesting a modest decline at the start of trading on Wall Street, where shares tumbled to 5-1/2 year lows on Friday, fueled by worries that the global slowdown could be worse than originally thought.

“Until the capital market situation is eased and the money comes out of governments into the banking system we are not going to see anything different. Recession remains on everyone’s lips and is the top concern,” said Howard Wheeldon, strategist at BGC Partners.

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The euro hit a two-year low against the dollar and its lowest since March 2002 against the yen, while in another sign of profound risk aversion, European credit spreads hovered just shy of Friday’s record highs.

“There’s lots of volatility, not just in the equity market but in the interest rate and currency markets too,” said Neil Parker, market strategist at Royal Bank of Scotland.

“We’re going to get further big swings as the markets watch for what the authorities are going to do,” he added.

The MSCI world index of shares .MIWD00000PUS, which on Monday was down by nearly 3 percent, has lost nearly 50 percent this year to reach its lowest since 2003 as investors around the globe have dumped stocks.

ECONOMY FEELS THE PINCH

Meanwhile, two-year euro zone government bond yields touched a new three-year low at 2.572 percent as concern about the economy intensified.

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A closely watched survey on Monday showed German business expectations fell this month to their lowest level since the country was unified in 1990.

“The full fallout of the recent wave of the financial turmoil is finally becoming visible,” wrote Carsten Brzeski, of the ING Financial Markets global economics team in a note.

“The financial crisis has rapidly turned into an economic crisis and German businesses have lost all confidence.”

In Asia, Japan's Nikkei index .N225 was down 6.4 percent at its lowest close since 1982 as the stronger yen hit exporters such as Canon Inc 7751.T and Toyota Corp 7203.T.

Japan promised fresh measures on Monday to try to shield the world’s second-biggest economy from the financial crisis while South Korea slashed interest rates and Australia’s central bank intervened for a second day to support its tumbling currency.

The actions by Asian policymakers come days ahead of a widely expected U.S. interest rate cut of 50 basis points by the Federal Reserve on Wednesday and a report on U.S. third-quarter economic growth on Thursday.

Analysts said the G7 statement suggested authorities were at least considering joint intervention to stem the yen’s recent surge although with the dollar riding high against currencies other than the yen, that remains far from certain.

The yen, which slipped initially after the G7 statement, climbed back toward Friday’s 13-year peak against the dollar, supported by the unraveling of carry trades built up over the last few years in which investors sold the low-yielding currency to buy higher-yielding, riskier assets.

This unwinding has hit emerging markets especially hard. More countries are expected to turn to the International Monetary Fund after Ukraine on Sunday agreed on a $16.5 billion loan and Hungary also agreed a package.

The dollar fell 1.4 percent from late U.S. trade last week to 92.99 yen, pulling back after rising to near 94.50 yen after the G7 warning.

The euro was down 2.6 percent at 115.94 yen, having touched a 6-1/2 year low of 113.61, according to Reuters data.

Mirroring global recession fears, oil pared some losses and was last down 1.3 percent at $63.33 a barrel, but was still close to its lowest level since May 2007, while spot gold -- ordinarily a perceived safe-haven investment -- shed about 2 percent, undermined by the strength in the dollar against the euro and weaker crude oil.