Asian stock markets are tumbling amid fears the US may be heading back into recession and Europe's debt crisis is worsening. The sell-off follows the biggest one-day points decline on Wall Street since the 2008 financial crisis.
Oil extended sharp losses to fall below $US86 a barrel on Friday amid expectations a slowing global economy will undermine demand for crude.
Japan's Nikkei 225 stock average slid 3.7 per cent to 9303.95 and Hong Kong's Hang Seng dived 4.8 per cent to 20,844.59. China's Shanghai Composite Index lost 1.9 per cent to 2,633.52.
'Losses today have been indiscriminate,' said IG Markets strategist Ben Potter in a report. 'The big question on everyone's mind is what will happen across European and US markets tonight and will there be any form of emergency policy response?'
The Dow closed Thursday down 512.76 points, at 11,383.68. It was the steepest point decline since Dec 1, 2008.
Thursday's decline was the ninth-worst by points for the Dow. In percentage terms, the decline of 4.3 per cent does not rank among the worst. On Black Monday in 1987, for example, the Dow fell 22 per cent.
Investors fretted over the US economic recovery ahead of Friday's release of crucial jobs figures for July, which often set the tone in markets for a week or two.
Many were also rattled by the lack of agreement in Europe about debt and how to stabilise the euro, said Tom Kaan of Louis Capital Markets in Hong Kong. He said they were watching to see if the US Federal Reserve launches a new stimulus effort.
'It's a general fear that is clouding the markets at the moment,' Kaan said.
Elsewhere in Asia, South Korea's Kospi shed 3.6 per cent to 1,945.72 and Taiwan's benchmark skidded 5.1 per cent to 7,891.66. Australia's benchmark dropped 4.1 per cent to 4,101.20 and India's Sensex shed 2.2 per cent to 17,312.04.
Investors, already fidgety after protracted political bargaining to raise the US debt limit and worries that Italy and Spain are getting deeply embroiled in Europe's debt crisis, searched for assets considered safer such as gold.
In Europe, most markets shed more than 3 per cent on Thursday. France's CAC-40 tumbled 3.9 per cent, Germany's DAX lost 3.4 per cent and Britain's FTSE 100 also slid 3.4 per cent.
'Stocks will continue to dive, especially in Euroland, where profits are disappointing analysts' estimates,' said Carl B Weinberg of High Frequency Economics in a report.
In currency markets, the US dollar edged down to Y78.64 from late Thursday's 79.02 and the euro weakened slightly to $US1.4116 from $US1.4130.
On Thursday, Japan's government intervened in markets to weaken the yen against the dollar to support exporters. Finance Minister Yoshihiko Noda said authorities acted to protect the economic recovery following the March 11 earthquake and tsunami.
The dollar had fallen as low as Y76.29 on Monday. It hit a record post-World War II low of Y76.25 in the days following the March 11 earthquake and tsunami.
The intervention was coupled with monetary policy easing by the central bank's board.
Japan's moves came only a day after the Swiss National Bank intervened to slow a rise in the Swiss franc, another currency perceived as a save haven at a time investors are fleeing risky assets such as shaky European government bonds.
Benchmark oil for September delivery was down $1.05 to $85.58 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $5.30 to settle at $86.63 on Thursday.
