MUMBAI: The BSE benchmark Sensex plunged by 260 points to close at nearly four-week low of 25,329.14, tracking global sell-off sparked by escalating geopolitical tensions after U.S. President Barack Obama authorised targeted air strikes in Iraq.

Adding to the worry of global investors, Russian President Vladimir Putin went on retaliatory measures by banning food imports from Western countries. Russia faces sanctions imposed by the U.S. and European countries.

Brokers said the sentiment was also hit by the rupee slumping to five-month low of 61.74 (intra-day) against the U.S. dollar with global crude prices shooting up.

Jayant Manglik, President, Retail Distribution, Religare Securities said: "Investors were also cautious after Reserve Bank Governor Raghuram Rajan warned that global markets are at the risk of a crash due to the lingering competitive loose monetary policies being followed by the developed economies."

After opening lower by over 180 points, the 30-share Sensex at one point was down over 350 points before ending the day at almost four week low of 25,329.14 --a level not seen since July 15--registering a steep loss of 259.87 points or 1.02 percent.

In straight three days, the key index has plunged by 578.87 points or 2.23 percent.

American President Barack Obama yesterday said that he has authorised targeted air strikes against militants in Iraq, key crude producer. The development is widely will further stoke up the global oil prices.

India imports 80 percent crude oil of its requirements and it will be a big jolt to the country's economy, ultimately affecting the current account deficit.