Global shares have fallen for a fourth day as investors questioned valuations, and Wall Street had its worst week in more than four years.
Investors and traders are trying to predict the bottom of the market
In New York, the Dow Jones index lost 1% after consumer confidence figures disappointed the market. The S&P 500 dropped 1.1%, and the Nasdaq lost 1.5%.
Indexes also fell in Europe and Asia as investors sold equities and bought less risky assets such as bonds.
The UK's FTSE 100 index lost 5% over the week, knocking £80bn off its value.
Since Monday, the Dow Jones has lost 4.2%, its worst week since March 2003. The S&P 500 is down 4.4%, its worst week since January 2003.
Leading declines were some of the biggest US stocks including computer firm IBM, chip producer Intel, carmaker General Motors, oil company Exxon Mobil and lenders such as New Century Financial.
A number of issues have come to a head this week, and the decline in share prices was triggered on Tuesday by fears of a new tax in China.
Investors have blamed issues as varied as the strength of the global economy, weakness in the US mortgage market, the outlook for corporate earnings and the effect of a stronger Japanese yen for their decision to dump equities.
Some market participants have raised the threat of a recession in the US, but many observers feel that this view is too extreme.
Analysts said stocks had been due a correction, adding that the question now was by how much and how long it would continue.
Last year, a drop in world stocks lasted for the best part of a month, and key markets tumbled almost 10% before recovering to their highest levels in recent years.
Friday's sell-off was given extra impetus because investors did not want to go into the weekend holding large positions that could lead to losses when Asian and European markets opened on Monday, traders said.
Much of Friday's drop was about "covering risk for the weekend", said Ernie Ankrim of Russell Investment Group. "For the most part, traders don't want to be holding anything except for the most secure assets."
One trader told Reuters that "everyone remains very edgy".
By the close of trading in London on Friday, the UK's FTSE had added 0.2 point to 6,116.2. In Germany, the Dax index lost 0.6%, and in France the Cac 40 shed 0.6%.
The Singapore Straits Times Index lost 0.6%, while Australia's main index fell 0.4%.
In Japan, Friday's closing losses on the Nikkei wiped out the last of the gains the index had so far made this year.
Shares in Hong Kong traded higher, with the Hang Seng index rising 0.3%.
"The market has been performing a bit irrationally in recent sessions amid sharp fluctuations," said Chen Huiqin, an analyst at Huatai Securities.