Emerging markets were hardest hit by the global retreat and the fresh commodity pressure, with the US dollar and government bonds the big gainers.
The Chinese government said on Monday that its annual economic growth fell to nine per cent in the third quarter from 10.1 per cent previously and that factory output in September was at a six-year low.
There is concern that the Chinese economic downturn is directly related to the US financial crisis.
Hu Jintao, the Chinese president, has told George Bush, his US counterpart, of his concerns over the state of the country’s financial system.
The two leaders reportedly spoke by telephone on Tuesday night.
According the Xinhua news agency, Hu said he hoped the measures would “take effect as soon as possible, restore investor confidence and prevent further expansion of the crisis”.
At the same time, Henry Paulson, the US treasury secretary, said China’s economy could be the key to a world recovery.
He said China’s new economic muscle could help pull the rest of the world out of the coming slump.
“While some see China as a threat that must be countered or contained, I believe that the only path to success with China is through engagement,” Paulson said.
“We must recognise that China’s growth is an opportunity for US companies and consumers, for our producers, exporters and investors.”
China’s banks have largely avoided investing in US toxic debt – but they still hold hundreds of billions of dollars in US government bonds.
China’s huge export sector also needs healthy US demand.
In India, another rapidly growing economy, fears of a global recession saw stocks in Mumbai open the trading day down 3.79 per cent.
Stocks in South Korea were also hard hit, with Seoul’s Kospi index ending the day down 5.1 per cent after earlier plunging as low as 8.4 per cent.
In New York on Tuesday, the Dow Jones industrial average fell 2.5 per cent, while other broader indices also declined.
The latest concerns emerged on Tuesday as a string of so-called bellwether corporations downplayed their prospects.
Corporations such as chemical manufacturer DuPont Co, Sun Microsystems and Caterpillar Inc – seen as key barometers of the health of the US economy – all issued gloomy earnings reports.
“The credit crunch seems to be behind us, and we are shifting focus to corporate earnings and economic conditions, and clearly both are deteriorating,” Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong told the Associated Press news agency.