Stocks plunged in early trading in Germany on Monday, a day after the government and banks agreed to expand a bail-out for troubled property lender Hypo Real Estate (HRE).

Frankfurt's blue chip DAX slumped 4.54 per cent to 5,533.57, its lowest level since July 2006.

All 30 companies on the index suffered losses, with financial institutions leading the way.

HRE was 48.3 per cent lower at 3.88 euros (5.27 dollars), Commerzbank was 14.8 per cent down at 12.08 euros and Deutsche Bank, Germany's biggest, was off 6.2 per cent at 49.75 euros.

Sunday's rescue plan for HRE is expected to run into 50 billion euros.

The bank, which mainly lends to commercial projects and to build public facilities such as airports and roads, is the biggest German casualty of the credit crunch that has spread from New York in the last month.

HRE fell into crisis after its Dublin-based subsidiary Depfa ran out of cash.