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Share markets around the world have tumbled, with investors worrying about
Irish government debt and possible measures in China to tackle inflation.
Europe's main markets opened 1-2% lower, following earlier falls in Asia.
This was despite efforts by G20 leaders to reassure investors about what would
happen if the Irish Republic defaulted on its debt.
China's main index suffered its biggest one-day fall for a year because of
fears interest rates will have to rise.
The Shanghai Composite index closed down 5% amid speculation that the Chinese
government could act to try to limit inflation in the coming days.
"There are some rumours there might be another interest rate hike this
weekend," said Linus Yip from First Shanghai Securities in Hong Kong.
Figures released on Thursday showed the Chinese inflation rate had reached a
two-year high of 4.4%, largely due to rising food prices.
This was despite recent government efforts to dampen price rises and cool its
rapidly growing economy through earlier interest rates rises and by introducing
limits on bank lending.
Hong Kong trader (file photo) The falls that have continued in Europe, began in
Asia overnight
'Unhelpful'
In Hong Kong, the Hang Seng index was down 1.9%. Japan's Nikkei index was down
1.4%.
In Europe, figures also showed that the economic recovery in France and Germany
had slowed in the third quarter.
A slowdown had been expected, especially in Germany which enjoyed record growth
in the previous quarter. But both figures were slightly lower than economists
had been predicting.
France's Cac 40 share index opened 2% lower, while Germany's Dax index and the
UK FTSE were both down by more than 1%.
The subdued sentiment coincided with the end of the G20 in South Korea, where
leaders agreed to work together to boost global growth.
European members of the G20 - France, Germany, Italy, Spain and the UK - issued
a statement aimed at reassuring the bond markets, which pushed the Irish
government's cost of borrowing to record levels this week.
Irish Prime Minister Brian Cowen said the intervention had not been helpful.
"What has been said there has had, I think, an unforeseen consequence,
perhaps," he added.
Irish bond yields fell, however, reflecting increased confidence in the
likelihood that Irish government debt would be paid back.
They dropped to 8.5%, down from the all-time high of 8.95% reached on Thursday.