Key European markets have suffered declines in morning trading, following sharp falls in Asia.
Global stock markets have suffered a sell-off sparked by concerns about the global economy and crude oil prices which have hit a new record.
By mid-afternoon, share indexes in Paris and Frankfurt were both down more than 0.5%, while London's FTSE registered a more modest 0.1% fall.
New York's Dow Jones closed down 0.93%, or 106.9 points, at 11,346.51 as the cost of oil rose to a fresh high above $142 a barrel.
Asian markets fell after the Dow Jones in New York hit a two-year low and oil hit a new high above $142 a barrel.
Losses were mirrored across the Atlantic, as share indexes in Paris and Frankfurt ended about 0.6% lower.
However, in New York the benchmark Dow Jones index opened ahead, up 0.13% at 11,468.15.
But London's FTSE shrugged off earlier losses to register a 0.2% rise.
Earlier China's benchmark Shanghai index dropped by 5.3%, while India's Sensex index declined by 4.3%.
Stock markets across Asia fell - earlier China's benchmark Shanghai index dropped by 5.3%, while India's Sensex index declined by 4.3%.
Indexes in Japan, Taiwan and South Korea all shed more than 2%.
Indexes in Japan, Taiwan and South Korea all shed more than 2%.
Crude oil surged to a record, as Brent crude jumped to $142.13 a barrel, while New York light crude climbed as high as $142.26, on concerns about supply.
Crude oil surged to a record, as Brent crude jumped to $142.13 a barrel, while New York light crude climbed as high as $142.26, on concerns about supply.
The fear on Wall Street, where the Dow fell more than 3%, is that rising prices and tighter finances will force Americans to curb spending and push the economy into recession.
The global stock market downturn began in New York on Thursday, when the Dow fell more than 3% to a two-year low.
Investors reacted to a string of bad news about several sectors of the US economy, a prime market for Asian exporters, while worries remain about the credit crunch and sub-prime fallout.
The fear on Wall Street is that rising prices and tighter finances will force Americans to curb spending and push the economy into recession.
'Risk averse'
Consumer concerns
"We've still got bad news on the credit crunch, we've got bad news about consumers," said Garry Evans, pan-Asian equity strategist at HSBC in Hong Kong.
Traders brushed aside positive news about US consumers on Friday.
"The macro environment is not a good one and people are very risk averse."
The US economic stimulus package, which will hand out $107bn to Americans this year, boosted household budgets and helped consumer spending rise 0.8% last month.
The fall in Tokyo also came after signs that oil and commodity prices were fanning inflation and causing consumers to hold back from spending.
But analysts are not convinced May's feelgood factor will last.
Meanwhile, uncertainties faced by China's economy due to the global economy and markets have increased, said Su Ning, deputy governor of the Chinese central bank.
"We have had very strong consumer spending, but most of the tax rebates went into savings, which might mean they are going to stay there," said Pierre Ellis, an economist at Decision Economics in NewYork.
"According to the mainstream viewpoint in the international community, the biggest part of the sub-prime-related crisis has passed, but the impact of the crisis is continuing," he said.
Investors also reacted to a string of bad news about key sectors of the US economy, while worries remain about the credit crunch and sub-prime fallout.
"There are different views on the trend of the dollar, and the rise of oil prices and their impact on the world economy. These things increase external uncertainties for China's economy."
Bleak company outlook
The negative mood has been compounded by a gloomy outlook from companies in the US financial, automotive and high-tech sectors.
Analysts said traders feared banks and lenders would take longer to recover from the turmoil in the sub-prime mortgage and credit markets.
Citigroup shares fell 6.3%, while Merrill Lynch dropped 6.8%.
Meanwhile, a downbeat assessment of how General Motors would weather the economic storm dragged its shares down 10.8% to close at $11.43, the lowest level in more than 33 years.
Technology stocks plunged too after industry bellwethers Oracle and Blackberry maker, Research In Motion, made worse-than-expected forecasts.
