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Falling commodity prices amid concerns about global demand have sent markets in the US and Europe falling.

The Dow Jones dropped 254 points, or 1.5%, to 16,256.

The FTSE 100 in London closed down 2.8%, the Dax in Frankfurt tumbled 3.8% and the Cac 40 in Paris dropped 3.4%.

Volkswagen was the biggest faller on the main European markets for a second day as the carmaker announced how much money it was setting aside to pay for the emissions scandal.

Its shares sank by 20%, having already dropped 19% on Monday.

Shares in other carmakers also fell, with Renault sliding 7%, Daimler down 7% and BMW dropping 5%.

In London, the falls were led by mining stocks as worries about demand from China and emerging markets continued to depress the shares.

Glencore was down 10%, Anglo American fell 6% and Antofagasta was down 7% as copper prices fell to a two-week low.

There is also still nervousness about when the Federal Reserve will decide to raise interest rates after the US central bank decided not to do so last week.

The fall in mining shares was sparked by the Asian Development Bank (ADB) cutting its growth forecast for China.

"If a downgrade from the ADB weren't bad enough for global stock markets, knocking the mining sector sharply lower on prolonged global growth fears, the auto sector has hit full reverse as Volkswagen's woes continue," said Michael Hewson from CMC Markets.

The Nasdaq was down 97 points, or 2%, at 4,731 while the S&P 500 fell 1.5% to 1,936.