United States and European share markets have returned to losses, but at a shallower rate than those seen on Thursday.
Shares in the UK, France and Germany slumped in late trading after Wall Street reopened, with the FTSE 100 ending Friday down 0.7 per cent, the Paris Cac 40 1.1 per cent and Germany’s Dax 1.8 per cent.
Oil prices also fell, with Brent crude down 1.8 per cent to just over $100 a barrel.
The sharpest falls came after US Fed said it could scale back its stimulus programme.
That sent the Dow Jones to close down 2.3 per cent on Thursday, its biggest fall of the year.
According to a BBC report, the Fed has been trying to support the weak US economy by buying bonds at a rate of $85bn (£54bn) a month, under a policy known as quantitative easing (QE).
However, late on Wednesday, Fed chairman Ben Bernanke said that if the US economy continued to show signs of improvement then the central bank could start to slow down its bond purchases as early as this year, and end the programme next year.
The bond-buying programme has been seen as a key factor behind the rise in stock markets in recent months, as the cash proceeds from the bond purchases flood through the economy and keep long-term interest rates low.
What’s currently worrying global investors isn’t just that the Fed seems poised to stop manufacturing all that almost-free money, it is that this could happen at a time when what’s happening in China may reinforce a global squeeze rather than counteracting it,” said Robert Peston Robert Peston Business editor.
