Frankfurt  - European markets faced up to a Black Friday as a wave of panic selling triggered by growing recession fears sent shares and currencies into a dramatic tailspin.

Already under siege as profit worries have grown, shares across Europe spiralled down after the OPEC oil producing nations' cartel cut production raising concerns about increase energy costs as the world economy was engulfed by a sharp slowdown.

With Wall Street slumping by more than 4 per cent shortly after its Friday opening, investors in Europe continued to dump stocks leaving the blue-chip Stoxx 50 down 6.1 per cent at 2090 as European trading came to an end.

"At the moment, there are only sellers in the market," said one Frankfurt trader as the dire company earnings forecasts continue to pile up around the world.

Friday's tumultuous performance by world stock markets brought to an end a chaotic and volatile trading week with key Asian stock markets winding up the week with big falls.

At one point on Friday, shares in Frankfurt seemed in freefall as fears about the impact of a sharp economic contraction on European exports helped to drive shares down on Germany's main bourse by about 11 per cent to a three-year low. Germany is the world's leading export nation.

The deepening of gloom facing the European economy resulted in the euro falling to a three-year low and the pound posting its biggest fall in 27-years as the dollar staged a comeback against leading European currencies.

The British economy has shrunk for the first time in 16 years, the nation's statistics office said, sending the pound down below 1.53 dollars and shares in London tumbling by about 8 per cent.

The bleak economic outlook also led a shakeout in emerging European currencies with the Polish zloty and the Hungary forint taking a pounding in trading Friday.

The euro plunged to a three-year low below 1.26 dollars amid analysts' forecasts that a sharp global economic slowdown and dwindling inflation will result in the European Central Bank (ECB) cutting interest rates again this year possibly as early as November.

The euro hit an all-time high of more than 1.60 dollars in July.

Since then, however, concerns have grown that the 15-member eurozone was edging its way towards recession.

Combined with weeks of drops in commodity and energy prices, the slowing world economy has helped to undercut inflationary pressures, giving the ECB room to follow up this month's hefty 50-basis points rate cut.

However, the OPEC members had hoped to bring a halt to the slide in oil prices, which have dropped by more than 50 per cent since July.

But despite OPEC's decision to cut oil production by 1.5 million barrels a day, recession worries kept up the downward pressure on oil prices, which fell to 17 months low after the Vienna-based group's announcement.

With the cut in production coming in lower than many analysts had expected, oil dropped 6.2 per cent to 63.62 dollars in late afternoon trading.

This in turn helped to drag down oil company shares which hit European stock indexes with Paris' CAC 40 index dropping more than 8 per cent. Zurich fell 7.5 per cent.

The big falls in European and US stocks came in the wake of shares in Tokyo cascading down almost 10 per cent and stocks in Hong Kong dropping by about 8 per cent. Shares in India dropped almost 11 per cent. (dpa)