JOHANNESBURG, Oct 6, 2008 (AFP) - South African shares plunged 6.97 percent Monday, hitting a two-year low in panic trade following a dive in markets around the globe, dealers said.

Johannesburg's All Share index fell 6.97 percent to 21,097.48 while the narrower Top 40 index dropped 1,570.24 points, or 7.65 percent, to 18,953.40.

Giant mining conglomerate Anglo American shares fell 11.31 percent while Billiton dropped 8.95 percent.

Steel producer Ispat Iscor plunged 26.14 percent and petrochemical gaint Sasol fell 9.58 percent.

The sell-off was sparked by fears of a recession in Europe and doubts about the effectiveness of a 700-billion-dollar US bank rescue package.

'This is madness,' Manny Adebowale, branch manager for Sanlam Private Investments, told South African news agency SAPA.

'Conventional wisdom doesn't work here,' said Adebowale. 'Fear rules the day.'