Investors fear that efforts to halt the banking crisis won't prevent recession
Asian shares have tumbled on growing fears of a global recession.
Japan's Nikkei index closed more than 11% down, while shares in Hong Kong shed 4.8%. Australian, South Korean and Indian indexes all fell.
The prospect of a protracted economic downturn also sent crude oil prices lower to hit a 15-month low at $68.60 a barrel.
Stocks had risen earlier in the week after governments acted to aid banks, but these gains have mostly been lost.
Investors fear that efforts to stem the banking crisis will not be enough to prevent a recession.
New York's Dow Jones index saw its worst one-day percentage fall on Wednesday since October 1987, closing almost 8% down.
There were also big falls in London and other European markets on Wednesday.
Ben Bernanke, the chairman of the Federal Reserve, warned that the US economy now faced a "significant threat" from the credit crisis.
'Real economy' impact
Signs of optimism seen earlier this week when markets recovered some of the lost ground have been all but wiped out.
In Tokyo, the Nikkei 225 index closed 11.4% lower, or 1,089.02 points, at 8,458.45. In Hong Kong, the Hang Seng index fell 7.6% to 14,785.60 points, before rallying somewhat to close down 4.8%.
Australia's main share index ended down 6.7% and India's main index fell sharply in early trading but recovered to finish down 2.1% at 10,581.49 points.
"There's a certain degree of panic selling in Tokyo but the sentiment's different from last week," Takashi Ushio, head of the investment strategy division at Marusan Securities, was quoted as saying by Reuters news agency.
"Last week people were panicking over the financial system, nobody really knew what would happen. But now it's the real economy."
Yutaka Miura, senior strategist at Shinko Securities Co Ltd, said investors were particularly unnerved by a 1.2% fall in the value of US retail sales between August and September.
"It really confirmed a severe slowdown in the US economy," he told the Associated Press news agency.
BBC business editor Robert Peston said that despite recent actions by central banks to help the banking sector, banks were still not lending to each other at anything like a normal rate of interest relative to official rates.
This was worrying as it meant banks were unlikely to lend money at better rates to consumers and businesses.
No quick turnaround
Many investors are now convinced that the US economy, if not already in a recession, is moving towards one.
A Federal Reserve report showed economic activity had weakened across the country.
In a speech in New York, Mr Bernanke said the US had avoided making the mistakes that helped plunge the country into the 1930s Great Depression.
He pledged that the Fed would continue to fight the credit crisis. But he warned it would take time for the country's economic health to mend.
"The turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth," he said.
"The last decade has shown that bursting bubbles can be an extraordinarily dangerous and costly phenomenon for the US economy."
The leaders of the G8 major industrialised nations agreed on Wednesday to hold a summit with other states to discuss global financial reform.
In Brussels, EU leaders rallied behind a plan to aid the bloc's banking sector.