European markets have plunged on deepening fears regarding a debt crisis in the European Union and concerns about US economic growth.

London's FTSE-100, Paris' CAC-40 and Frankfurt's DAX indices all opened down over 3 per cent on Friday.

After the sharp initial drop, all three indices had recovered slightly by 1200GMT, with the British FTSE-100 at 5,282 points, the German DAX at 6,300 and the French CAC at 3,309.

Earlier, Asian markets also tumbled, after heavy losses in European and US trading through the day on Thursday.

The Nikkei index at the Tokyo Stock Exchange closed down 359.30 points (3.72 per cent) at 9,299.88. The bulk of that loss came in the opening eight minutes of trading.

South Korean shares hit their lowest levels since March, with the benchmark KOSPI index losing 3.6 per cent to close at 1,943.75.

The index had lost 7.1 per cent in the three sessions from Tuesday to Thursday, one of the steepest falls among major Asian markets.

Angela Merkel, the German chancellor, and Nicholas Sarkozy, her French counterpart, are to interrupt their holidays and to discuss the eurozone debt crisis via telephone later on Friday.

Sarkozy's office said that the French president will also speak with Jose Luis Rodriguez Zapatero, the Spanish prime minister, on the matter.

Elsewhere, Australian stocks plunged four per cent in trade on Friday after carnage on US and European markets overnight over fears of another world economic downturn.

Worst one-day fall

The benchmark S&P/ASX 200 closed 171.12 points lower at 4,105.40 after the Dow Jones Industrial Average dropped 4.3 per cent on Thursday, its worst one-day fall in more than two years.

Other markets that saw a slide included the Indian Sensex, which lost over 3 per cent to 17,145.75 (at 0630GMT) and Taiwan's benchmark index, which shed 5.1 per cent to 7,891.66.

The Russian benchmark index hit its lowest levels since May on opening, with the RTS falling 2.7 per cent to 1,806.4 points.

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Yang Jiechi, China's foreign minister, called on Friday for more global cooperation to resolve the US and European debt crises. In particular, Yang called for "responsible" monetary policies from Washington DC.

China has a major stake in the future of the dollar, with some estimates putting 70 per cent of its $3.2 trillion of foreign reserves as being invested in dollar assets.

"All countries must further increase communication and coordination, push ahead reforms in the global financial system, and improve governance of the global economy," Yang told the media in Poland, where he is on an official visit.

Investors have fled stock markets on both sides of the Atlantic in the worst stock-market sell-off since the depths of the recession in early 2009, in what has turned into a full-fledged correction.

The Dow Jones and the S&P fell more than four per cent and the Nasdaq lost five per cent on Thursday on fear that the US is heading for another recession and that Europe's sovereign debt crisis is spreading to two of its largest economies.

European stocks fell to a level not seen since after the financial crisis in mid-2009, with Italy's equity market firmly in bear market territory - down nearly 30 per cent since February - as investors worried the eurozone debt crisis was spreading.

Italy's blue-chip FTSE MIB index was suspended about 30 minutes before the close. The index fell slightly more than five per cent.

Analysts predicted further losses even though stocks have fallen on nine of the last 10 days. Two-year US treasury yields fell to a record low as investors sought safety in short-term government bonds.

The S&P 500's drop puts it more than 10 per cent below its April 29 high, considered a correction.

More than 13bn shares changed hands, making it the busiest trading day in more than a year. Decliners beat advancers on the New York Stock Exchange by about 19 to 1.

Worsening data

The market's malaise springs from a number of factors. US economic data has worsened, suggesting slowing growth from an already sluggish pace in the first half.

Reporting from New York, Al Jazeera's Scott Heidler explained: "You can blame it partially on Europe, but also the economy here in the United States is very sluggish. Not only is it slow, the concern is how are they going to kickstart it. There's no saviour out there."

Moreover, he said, worried Americans' shaken confidence in the markets may exacerbate the problem.

"Those Americans who don't even invest in the market, they look to the market and if its going down, they stop their spending."

Meanwhile, Europe's sovereign debt crisis appeared to defy remedies amid growing fears that it may spread to large eurozone economies.

"The debt troubles in Europe, especially with the yields on Italian and Spanish government bonds soaring, are making investors gather as much liquidity as possible," Stephen Massocca, managing director of Wedbush Morgan in San Francisco, said.

"The [European] sovereign debt crisis ... appears to be worsening, with fears now that Italy, the third largest economy in Europe, may be find itself unable to pay off its mountain of debt and that could lead to a default that could effectively lead to the collapse of the euro," reported Al Jazeera's Jonah Hull from London on Friday morning.

Hull said that the sovereign debt crisis coupled with the poor economic indicators from the US were having a knock-on effect on European and Asian markets.

"Effectively it's fear in the markets feeding on fear," he said.

Source: Al Jazeera and agencies