The euro fell to its lowest level against the US dollar since May on rising risk aversion.
The cost of insuring the debt of some euro zone countries against default hit record highs because of their fiscal deficits.
The dollar was bolstered against both the euro and yen after a report on U.S. payrolls showed American employers cut more jobs in January even as the unemployment rate fell.
The dollar's strength hammered commodity prices, which had fallen sharply on Thursday. Gold and copper slid to three-month lows. Oil prices fell to the lowest level in over a month, closing near $71 a barrel.
The US economy shed 20,000 non-farm payroll jobs in January and the unemployment rate unexpectedly fell to five-month low of 9.7 percent.
Analysts had expected a gain of 5,000 jobs while the jobless rate was seen edging up to 10.1 percent from 10 percent in December.
"It's a series of conflicting data....The positive take is basically it wasn't a total disaster, but the flip side of it is you're not seeing a recovery," said Doug Roberts, chief investment strategist at Channel Capital Research.com in Shrewsbury, New Jersey.
The MSCI all-country world index fell 1.8 percent, hitting its lowest since early November.
European shares fell to two-month lows, following sharp falls in Asia.
The euro fell as low as $1.3649. The single currency has been under pressure all week as widening government bond spreads highlighted concerns over the ability of some euro zone governments to pay their debts.
The bond prices of heavily indebted euro zone countries, including Greece, Portugal and Spain, fell sharply.
The cost of insuring Greek, Portuguese and Spanish debt against default, measured by credit default swaps, both hit record highs Friday.
The concern over sovereign credit has also begun to knock confidence in markets beyond the euro zone.
Stocks in emerging markets have fallen sharply in the past two weeks, with a key index at a three-month low.