Shares in Europe and the US have suffered a second day of falls on continued fears about a slowdown in the global economy.
In afternoon trading, London's FTSE 100 was down 1.8%, Germany's Dax was down 3.2% and France's Cac was 2.1% lower.
US markets opened lower, with the Dow Jones index down 0.8% and the S&P index dropping 0.76%.
Investors are worried global growth is slowing, and that major economies may be heading back into recession.
Earlier, the Greek finance minister said his country's new bailout deal was not in doubt.
Evangelos Venizelos' comments came after four countries demanded collateral in exchange for their contributions to the 109bn-euro (£95bn) loan, after Finland agreed a deal with the Greek government.
Austria, the Netherlands, Slovenia and Slovakia have all said they want to do the same, which could complicate efforts to finalise the rescue deal.
But Mr Venizelos told Greek radio the bailout "is not in doubt, because it is of vital importance to the eurozone".
'Painful realisation'
On Thursday, Morgan Stanley said that the US and Europe were "dangerously close to recession".
The falls follow steep losses in the US and Europe on Thursday, and mark a week of declines in global stock markets.
In afternoon trade, the FTSE 100 index was down 93 points, or 1.8%, at 4,999.4.Some bank shares across Europe were hit again, with Lloyds down 5.4% in London and France's BNP Paribas down 3.9%
Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said the latest falls meant the FTSE 100 had fallen 16% so far this year, with debt and growth the two major concerns.
"There is a painful realisation that the rhetoric of the policy makers has yet to translate into any definitive plans, which could go some way in assuaging investors' concerns," he commented.
"There seems to have been little co-ordinated action in an effort either to spur growth or to put in place a roadmap for dealing with the increasingly difficult debt situation of many developed economies, most notably the US and Europe."
A recent poll in Germany suggested three-quarters of those surveyed had little or no faith in Angela Merkel to deal with the eurozone crisis, while a similar poll in France suggested only 33% of people had confidence in Nicolas Sarkozy.
Meanwhile a number of measures designed to cut spending and boost growth as it seeks to reduce its deficit.
The cabinet agreed, for example, a sharp cut in tax on the sales of new properties, to help its battered housing and construction sectors.
Bear market?
In Asia, South Korea's Kospi dropped 6.2%, while Japan's Nikkei 225 fell 2.4% and Australia's benchmark S&P/ASX 200 index ended down 3.5%.
Many analysts are questioning if a bear market - one in which the long-term trend is negative - has now developed and is here to stay.
"Bear markets tend to happen when sentiments are low and that comes from weakened demand and bad news flow," Chou Chong of Aberdeen Asset Management told the BBC.
Tobias Blattner from Daiwa Capital Markets added that markets had got "a bit ahead of themselves" earlier in the year, when big rises were seen, and were now repricing."We are back a little bit unfortunately to the period after Lehman in which markets are acting more on rumours - on European banks for example," he said.
"Unfortunately markets are acting less on fundamentals and more on rumours."
Also on Friday, oil prices recovered from early losses, as the dollar weakened, making commodities more attractive.
London Brent was up 70 cents at $107.69 a barrel, while US crude was 61 cents lower at $81.77, although this was up from a session low of $79.17.
The price of oil had fallen earlier as investors bet that slower global growth would dent demand for crude.
Amid the worries about the state of the global economy, so-called safe haven investments continued to rise, with the spot price of gold hitting a new record high of $1,867.30 an ounce.
The Swiss franc rose against the euro, despite recent attempts by the Swiss authorities to weaken it earlier this month.
'' Bond yields''
On Thursday, there was a sharp rise in the price of bonds issued by countries considered to be the least risky. This caused their yields - the implied cost of borrowing - to plummet to historic lows.
The 10-year US treasury yield briefly dipped below 2% to its lowest level since World War II.
The 10-year German bond yield also fell to a post-war low, while the 10-year UK gilt yield hit the lowest level since the 19th century.
So although the lower cost of borrowing is good news for those countries, the "torrent of money" going into putatively safe US and British government debt is redolent of a worrying trend, according to BBC business editor Robert Peston.
It means one of two things, our correspondent says.
"Either money tends to become harder to obtain by those in the private sector who take the risks which generate economic growth and wealth; or the climate of pervasive anxiety means that even when money is available to consumers and businesses, they don't want to spend or invest it."
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