European stocks hit 6-year lows, U.S. stock futures indicated a lower open on Wall Street and the euro fell on Friday on concern about the state of the U.S. and European banking sector.
Banking stocks led the decline, including U.S. banks Citigroup (C.N) and Bank of America (BAC.N) listed in Frankfurt, on worries that these and other European banks could be nationalized.
The level of exposure of western European banks to eastern European economies also weighed on banking stocks and the euro, while a record low reading in the February euro zone flash services purchasing managers' report boosted euro zone government bonds.
"We're near the cliff's edge, very close to capitulation, the mood is very gloomy," said Jean-Claude Petit, head of equities at Barclays Wealth Managers France.
"I'm not sure that governments and central banks are realizing what's really going on. The gaffes made by west European banks in east Europe revealed recently are having a devastating effect on the market."
The FTSEurofirst 300 index of leading European shares .FTEU3 hit a six-year low of 739.12, down more than 2.5 percent. The MSCI world equity index .MIWD00000PUS hit its weakest since November 21, down nearly 1.5 percent, and U.S. stock futures all fell more than 1 percent.
Benchmark emerging equities .MSCIEF dropped 2.8 percent to one-month lows.
Reflecting the downbeat global mood, Japan's central bank said on Friday that a deterioration in corporate profits had gathered pace.
"It looks like the tentative signs of stabilization that we had witnessed in January seem to have dissipated so far this month, suggesting that the worst may not be over yet," said analysts at Goldman Sachs in a client note.
The euro dropped 0.3 percent against the dollar and 0.5 percent against the yen, although it recouped earlier steeper losses, and euro zone government bond futures rose 59 ticks.
Safe havens were in vogue, with spot gold prices climbing above $993 an ounce, the highest since July. Analysts say the $1,000 barrier will be breached soon.
Oil fell more than $1 below $38 a barrel on the deteriorating global outlook, after posting a 14 percent gain on Thursday, the biggest settlement gain this year.
