In Europe, investors were also reacting to this week’s nationalisation of Icelandic banks Glitnir, Kaupthing and Landsbanki, victims of the crisis.

“We are drowning in a sea of red numbers,” said Barclays Wealth analyst Henk Potts.

“Investors are concerned about the exacerbation of the credit crunch and the gloomy forecasts for economic growth.

“The reality is that most investors have been spooked by the sheer pressure that the credit crunch is putting on the global economy.”

“Today looks to be starting off as a complete bloodbath. The FTSE was obliterated on the open,” said Capital Spreads managing director Simon Denham in London.

He also warned investors: “Do not bet the house on a turn in the markets.”

Back in Asia, the Tokyo market suffered the biggest loss in two decades, surpassing Wednesday’s plunge of 9.38 percent. The Nikkei has lost more than 24 percent over the past week.

Indian shares closed down 7.07 percent Friday, despite an injection of liquidity from the country’s Reserve Bank. 

“It is ghastly,” said Macquarie Equities associate director Lucinda Chan in Sydney.

“Investors are buying up gold. It’s the only safe haven out there, otherwise it’s red everywhere.”

Japanese Prime Minister Taro Aso warned the slump “has reached a point where it affects the real economy.”

The Bank of Japan pumped a total of 4.5 trillion yen (45.5 billion dollars) into money markets, the most since the financial crisis started, while the stock exchange briefly halted some trading in futures and options. Singapore eased monetary policy for the first time in more than four years.

In Russia, regulators ordered the two main stock markets to remain closed after sharp falls in the United States and Asia, local media reported.

Markets were hoping for even more radical action from finance ministers and central bankers in the Group of Seven rich nations, which was to meet in Washington later Friday after emergency interest rates cuts by top world central banks this week failed to calm the turmoil.

The price of safe-haven gold rose while oil prices fell on worries about the prospect of weaker demand and as investors liquidate assets. Brent North Sea crude sank below the 80-dollar mark for the first time in about a year.

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