Digby Jones predicts a 'difficult winter' ahead for the UK economy
Global stocks have fallen sharply on one of the worst days of trading in 30 years, despite continuing government efforts to tackle the crisis.
The UK's main FTSE 100 index ended down almost 9% before a meeting of the finance ministers from the Group of Seven (G7) most-developed nations.
In a day of major panic selling, the Dow Jones index fell as much as 5% in the US before ending down 1.5%.
The fear is that the financial crisis will tip the world into a recession.
France's Cac index closed down 7.7%, while Germany's Dax lost 8.4% in a day of heavy selling.
In other major developments:
The British pound tumbled to a five-year low against the US dollar to trade at $1.6902 at one point, but recovered later. It also fell against the euro to 1.245 euros
Tokyo's shares plunged 24% during the week, double their weekly fall during the 1987 market crash
Oil prices fell to a one-year low, with US light crude dropping to $77.99. Back in July it hit a record high of $147.27
The three-month rate at which banks lend dollars to each other - known as Libor - rose to 4.8%
Moscow and Jakarta stock markets remain suspended because of excessive volatility
The Vienna stock market fell 10% on re-opening after trading was suspended on Friday morning
Investors increasingly fear a global recession, despite interest rate cuts and cash injections by central banks.
President Bush said the White House was acting to resolve the crisis and restore stability to the markets.
"We are a prosperous nation with immense resources and a wide range of tools at our disposal," he said.
After meeting in Washington, G7 finance ministers said they would take "decisive action and use all available tools" to tackle the world economic crisis.
Their talks come ahead of the annual meetings of the International Monetary Fund and World Bank, also in US capital, on Saturday and Sunday.
Wall Street's Dow Jones ended down 128 points to 8,451.
"Fear has been running all over Wall Street," said Dave Henderson, a floor trader on the New York Stock Exchange.
"I think the carcass has been stripped to the bone."
The FTSE closed down 381.7 points lower at 3,932, wiping £91.2bn off the value of the largest UK shares.
The index has fallen 21% this week - the second-biggest weekly fall in FTSE 100 history.
The largest single day fall on the FTSE 100 was on Tuesday, 20 October 1987, when the index lost 12.22%.
This was a day after the so-called Black Monday global stocks crash, when the FTSE 100 declined 10.84%.
For that week as a whole the FTSE 100 declined 28.23%.
In Paris, the Cac 40 index finished down 266 points to 3,176.5, while the Frankfurt-based Dax closed 343 points lower at 4,533.7.
Earlier there were heavy falls across Asia's markets as a climate of fear took hold.
In Japan, the Nikkei index slumped in its biggest one-day drop since the 1987 stock market crash.
DOW JONES INDUSTRIAL AVERAGE: 10 October 2008
*All Times GMT
FTSE 100 INDEX: 10 October 2008
*All Times GMT