European and Asian markets have fallen sharply on fears that the world economy will enter a protracted downturn.
World shares have fallen amid concerns that the world economy will enter a protracted downturn.
London's FTSE 100 index was down 1.7% around midday, with mining shares hardest hit. French and German markets also lost ground.
The US Dow Jones index Industrial Average fell 2.3% in early trade while the wider S&P 500 Index shed 3%.
In Asia, Japan's Nikkei index ended 6.8% lower and Hong Kong's main index fell more than 4%.
London's FTSE 100, the Paris-based Cac and Frankfurt's Dax were all down more than 3% in afternoon trade. Earlier, Asian shares had fallen sharply.
The slide comes after the Dow Jones share index in New York fell to its lowest level in five years.
Concerns over a sharp slowdown in US factory activity added to worries about the strength of the economy.
The FTSE 100 was down 66 points at 3,939.69 points after falling almost 5% on Wednesday. Germany's Dax index lost 1.2% and France's Cac 40 shed around 2.1%.
A survey from the Philadelphia Federal Reserve showed that factory activity covering the key areas of eastern Pennsylvania, southern New Jersey and Delaware fell by more than forecast in November.
People are looking for any kind of positive and there are just no positives out there Miles Remington, BNP Paribas Securities
The index, which is seen as a key gauge of the state of US manufacturing, slipped to minus 39.3 from minus 37.5 in October.
On Wednesday, the Dow Jones index fell 5% to below 8000 points after the US central bank slashed its economic growth forecasts for 2009.
And new claims for unemployment benefits leapt last week to their highest in 16 years, according to the US Labor Department.
The deepening global recession is being felt in a number of ways:
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Mining
shares have been hit hard on fears that demand for steel and other raw materials will be hit as the economy slows. Steel giant Arcelor-Mittal lost 8% and Vedanta Resources lost 8.5%
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Oil
prices fell for a fifth straight day to approach $50 a barrel
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Japan's
exports to Asia dropped in October for the first time in six years
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Job
losses are mounting worldwide, with aerospace firm Rolls Royce, AstraZeneca and French carmaker Peugeot Citroen announcing a total of 6,100 cuts
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China
has warned its employment outlook is "grim", amid worries that economic problems could lead to social unrest
Switzerland
has cut its key interest rate to 1% in a surprise move.
The
IMF has approved a $2.1bn (£1.4bn) loan for Iceland. Turkey is set to agree to a precautionary stand-by deal with the IMF soon
Retail
sales fell and public sector borrowing rose in the UK.
The White House indicated on Thursday that US President George W Bush would approve legislation to increase unemployment benefits.
Depressed outlook
On Wednesday, the Dow Jones index had fallen 5% to below the 8,000 mark after the US central bank cut its economic growth forecasts for 2009.
The BBC's Duncan Bartlett in Tokyo says several East Asian countries - including Japan, Singapore and Hong Kong - are already in recession, and the thought that the US may be about to join them has been enough to send shares tumbling across the region.
In Asia on Thursday, Japan's Nikkei index ended 6.8% lower and Hong Kong's main index fell more than 4%.
Bad news from the US has worried Japanese firms like Toyota and Nintendo which usually depend on American consumers for much of their profit, our correspondent adds.
Mounting problems
"We've gone past the poor sentiment stage," Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong, told the Associated Press news agency.
The deepening global recession is being felt in a number of ways:
class="bulletList">
Mining
shares have been hit hard on fears that demand for steel and other raw materials will be hit as the economy slows. Steel giant Arcelor-Mittal lost 8% and Vedanta Resources lost 8.5%
Oil
shares were among the main fallers with BP, Royal Dutch Shell and Total all at least 5% lower as sweet crude oil fell below $50 a barrel.
Japan's
exports to Asia dropped in October for the first time in six years
Job
losses are mounting worldwide, with aerospace firm Rolls Royce, AstraZeneca and French carmaker Peugeot Citroen announcing a total of 6,100 cuts
China
has warned its employment outlook is "grim", amid worries that economic problems could lead to social unrest
Switzerland
has cut its key interest rate to 1% in a surprise move.
The
IMF has approved a $2.1bn (£1.4bn) loan for Iceland. Turkey is set to agree to a precautionary stand-by deal with the IMF soon
Retail
sales fell and public sector borrowing rose in the UK.
"People are looking for any kind of positive and there are just no positives out there. Everyone seems to be united in the depressed global outlook. Whether it's commodities or equities, everything seems to be on a downturn."
US slowdown
On Wednesday, the US Federal Reserve said the country's gross domestic product - the value of all goods and services - could be flat or grow only marginally this year, and might shrink in 2009.
It said positive economic growth was only likely to return in 2010 and predicted further interest rate cuts might be necessary.
Month-on-month US consumer prices fell by 1% in October - the biggest drop in 60 years - which has reinforced fears of rapid slowdown.
What is your reaction to the stock market losses? Have you been affected by the downturn? You can send us your experiences using the form below:
What is your reaction to the stock market losses? Have you been affected by the downturn? You can send us your experiences using the form below:
