John Terrett, Al Jazeera's correspondent in New York, said: "The markets have come down more than 20 per cent in just seven days. This is a market crash by any other name.
"The markets are concerned about the banks... and are not seeing the global leadership they are seeking. All eyes are on today's G7 meeting in Washington."
In Vienna, the stock exchange was suspended after stocks tumbled 10 per cent at the opening bell, and in Russia representatives of the MICEX and RTS exchanges said they had suspended regular trading until further notice under orders from financial regulators.
Russia's Duma, the country's lower house of parliament, later announced it had approved two financial crisis packages worth a total of $86bn on Friday.
They include making available $50bn of state money to banks and companies who need to refinance foreign debt, and giving $36bn to Russia's key banks in loans.
Oleg Morozov, the Duma vice-speaker, said: "It's understood that those who play the stock markets, those who have taken big sums of credit in the West, the big companies, they are in a risk zone, the same as any financial and economic activity.
"Today we are helping them too by taking the decision [to ratify financial crisis measures], so I repeat again - today there is no reason at all for panic in the financial markets."
But efforts to thaw frozen credit markets and boost investor confidence, such as co-ordinated interest rate cuts by the world's central banks, have fallen flat as markets remain gripped by fears about the scale and depth of the likely global recession.
Speaking to Al Jazeera, Jeremy Batstone, head of research at Charles Stanley Brokers in London, said: "What we have got to remember is that a stock market is essentially a bet on a future company's profitability, and company profits are under major pressure, as the world enters an economic recession, so says the IMF head.
"If that's the case, then clearly profits across a range of sections are under pressure, its not a great surprise then, that stock markets are selling off.
"The other problem is in the money markets where banks remain very wary and to some extent are unable to deal with each other, which in turn is fostering the fear that we're seeing spread around the world."
The latest woes in Europe came after the Dow Jones index in the US closed down 678.91 or, 7.3 per cent lower, at 8,579.19, on Thursday the first time it has fallen below 9,000 in five years.
Meanwhile, the global credit crisis claimed its first Japanese financial institution on Friday as the government looked to prop up the country's smaller banks.
|Japan's Nikkei has lost nearly a quarter of its value during the week [AFP]
Ministers played down the risk of contagion from the collapse of Yamato Life, an unlisted, small insurance company, but investors were spooked.
The benchmark Nikkei 225 index fell 881.06 points, or 9.6 per cent, to 8,276.43, marking its lowest closing level since May 2003.
It was its biggest one-day percentage loss since the stock market crash of October 1987 and meant that the Nikkei lost nearly a quarter of its value during the week.
In Sao Paulo, South America's largest stock market, trading was automatically suspended after the market slid more than 10 per cent.
Finance ministers and central bankers from the Group of Seven industrialised nations are due to meet later on Friday in Washington to address the financial meltdown but market commentators are sceptical that they can do anything to soothe concerns about the world economy.
Speaking to Al Jazeera from Paris, Max Keiser, a financial analyst, said: "[This is] pure greed, pure hubris, the gods are punishing us humans. We are going to enter something like 1893 which was a lot worse than the 1929 [Wall Street crash].
"This is a catastrophe, these are suicide bankers ... they are almost completely out of control."
George Bush, the US president, is due to make an address on the economic situation to the American people later in the day.