Stocks slid on Monday as news of a record $61.7 billion quarterly loss at embattled insurer American International Group fueled worries the already deep financial crisis is worsening.

The Dow Jones industrial average <.DJI> fell to its lowest level since May 1997 on an intraday basis, hit by a sell-off in financial and energy stocks.

Wall Street extended a global stock market rout that slammed stock markets around the world, with European benchmark indexes <.FTEU3> down 3 percent or more.

Adding to the gloom were comments by billionaire investor Warren Buffett who said the economy will be in shambles throughout 2009.

The problem is that no-one yet has a feel that the recession will end this year, said John Wilson, chief technical strategist at Morgan Keegan in Memphis, Tennessee.

The depth and duration of the recession is up for question and until people determine that, I think the market will have a tough time making a lot of progress.

The Dow Jones industrial average <.DJI> fell 108.08 points, or 1.53 percent, to 6,954.85. The Standard & Poor's 500 Index <.SPX> slid 12.25 points, or 1.67 percent, to 722.84. The Nasdaq Composite Index <.IXIC> dipped 16.17 points, or 1.17 percent, to 1,361.67.

Energy shares were the top drags on the Dow as oil slid more than 6 percent. Exxon Mobil and Chevron fell nearly 2 percent.

Financial shares were among top drags, with Goldman Sachs down 2 percent to $89.34, while Morgan Stanley slid 4.4 percent to $18.70. Shares of big manufactures were also down, with Caterpillar Inc down 3.5 percent at $23.71.

AIG, which received $150 billion in U.S. taxpayer aid last year, will gain access to an additional $30 billion under the government's revised plan announced on Monday.

Its fourth-quarter loss was the biggest in U.S. corporate history. Also weighing on markets was news that EU leaders were considered not to have reached any meaningful agreement on a rescue package for eastern Europe.

On the economic front, the Institute for Supply Management's manufacturing report for February is due at 10 a.m..

(Additional reporting by Ryan Vlastelica; Editing by James Dalgleish)