Major European share indices tumbled to three-year lows mimicking Thursday's drop on Wall Street.
The FTSE Eurotop and the DJ Euro Stoxx 50 were down more than 4 per cent as investors cleared out of particularly vulnerable sectors.
European share markets have lost 15 per cent and the US market has fallen 10 per cent since Wall Street reopened on Monday. Analysts said there were no near-term prospects for a recovery.
Investors were diving for cover into the Swiss franc and bonds this morning as equities and the dollar crumpled on escalating worries of a war in retaliation for last week's attacks on the United States.
The Swiss franc surged to a 20-month high against the dollar and a new record high against the euro.
Technology shares registered the biggest decline, down 6.3 per cent, as sector leaders Siemens, Nokia and Ericsson plunged.
Peugeot, Porsche and Renault led a 5 per cent fall in the auto sector, with individual losses of 7 to 8 per cent each.
Insurers were also hit hard, with France's Axa down 6 per cent and reinsurance companies Swiss Re and Munich Re both dropping over 4 per cent.