European stocks were expected to open lower on Friday after plunging to their biggest daily fall since March 2009 on Thursday amid renewed fears over funding for banks in Europe and concerns that the US recovery is stalling.
The DAX recorded the steepest fall, dropping 5.82 percent by Thursday's close as traders remained nervous over the ability of Europe's leaders to resolve the sovereign debt crisis.
Britain's FTSE 100 was seen opening 41 to 49 points lower, or as much as 1 percent, Germany's DAX was expected to fall 32 to 41 points, or as much as 0.7 percent, and France's CAC was seen down 26 to 32 points, or as much as 1 percent, according to financial bookmakers.
European banks were particularly hard hit due to their exposure to peripheral Europe and some of the biggest fallers included Barclays , Societe Generale and Commerzbank.
Banks also suffered in the US, with Morgan Stanley and Citigroup recording sharp falls in their shares on Thursday.
Morgan Stanley revised down their 2011 and 2012 global growth forecasts and warned that the global economy is now "dangerously close to recession".
Wall Street closed off session lows, but a raft of bad economic data added to Thursday's woes and will do nothing to allay concerns that a recession is imminent.
In Asian trade on Thursday it was a similar story as concerns over the sovereign debt crisis, US economic data and the health of banks spooked investors who fled from volatile equities.
The price of gold soared with spot gold hitting a record $1,838.93 an ounce, while US gold also reached an all-time high of $1,844.60.
In a quiet day on the economics front, German PPI data for July will be released at 7:00 UK time, followed by UK public sector finance data at 9:30.