There were similar falls across Europe - Paris was down 8.4% while Germany was down 9.1%.

Investors fear a global slowdown, despite interest rate cuts and huge cash injections by central banks.

Heavy falls were seen across Asia's markets as a climate of fear took hold on Friday.

In Japan, the Nikkei index slumped in its biggest one-day fall since the 1987 stock market crash.

The crisis also claimed its first Japanese financial institution, with the insurance company Yamato Life going bankrupt.

The Dow Jones - the US benchmark index - ended down 7.3% on Thursday - tumbling below 9,000 points for the first time since August 2003.

Finance ministers from the G7 leading industrial countries are set to meet in Washington to discuss the crisis.

US President George W Bush is due to make an address to the American people later in the day; as well as the G7 meeting, talks will be held at the International Monetary Fund (IMF) in Washington.