Milan, Italy  - The collapse of US bank Lehman Brothers reverberated in Italy's financial capital of Milan where the stock exchange plunged nearly 3.6 per cent by midday Monday.

The downward trend was led by the country's two largest banks, Unicredit and Intesa San Paolo, which fell 5.54 and 4.3 per cent respectively.

Other losers including industrial group Fiat, which lost 2.23 per cent of its value and internet provider Tiscali, down 3.02 per cent.

Shortly after noon the Milan Bourse's benchmark S&P/Mib had lost 3,57 per cent to stand at 27,359. (dpa)