Bush said the government would "move aggressively" to address the markets crisis, but he acknowledged that anxiety feeding on itself was sending stocks plummeting.
"The United States government is acting; we will continue to act to resolve this crisis and restore stability to our markets. We can solve this crisis and we will," he said.
The president acknowledged mounting worry among people about their investments and retirement and said the US was working "closely with our partners from around the world'' to steady stressed financial markets.
The volatile trading in new York was matched in Europe where Britain's FTSE-100 was down 6.54 per cent, German's DAX 6.39 per cent lower, and France's CAC-40 off by 6.6 per cent in afternoon trading.
Asian stock markets had dropped sharply earlier on Friday, with the Nikkei 225 down 9.6 per cent and the Hang Seng lower by 7.2 per cent.
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."
Finance ministers and central bankers from the Group of Seven industrialised nations are due to meet in Washington but many 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."
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.
|Japan's Nikkei has lost nearly a quarter of its value during the week [AFP]
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."
In Sao Paulo, South America's largest stock market, trading was automatically suspended after the market slid more than 10 per cent.
While in Japan, the global credit crisis claimed its first financial institution on Friday as the government looked to prop up the country's smaller banks.
Ministers played down the risk of contagion from the collapse of Yamato Life, an unlisted, small insurance company, but investors were spooked.
The Nikkei suffered its biggest one-day percentage loss since the stock market crash of October 1987 after the news. It has lost nearly one quarter of its value during the week.