Main European indexes fell about 3% and stock markets across Asia tumbled amid investor fears of possible slowdowns in the Chinese and U.S. economies, but later recovered some of their losses.
Shares in Japan, Hong Kong, Singapore, Malaysia, India, Australia, Indonesia and the Philippines all plunged more than 3% in morning trading following overnight losses on Wall Street, causing the worst drop since the Sept. 11, 2001 terrorist attacks.
Investors were also unsettled by comments from former U.S. Federal Reserve Chairman Alan Greenspan, who said a recession in the U.S. was "possible" later this year.
The slide followed a 3.3% fall in the Dow Jones industrial average and a 2.9% Nikkei drop.
Chinese stocks later recovered following their worst plunge in a decade. The Shanghai Composite Index gained 3.9%, to 2,881.07, after opening 1.3% lower.
Analysts said they expected China's stock market to stabilize and keep climbing, although further short-term declines were possible.
Russia's benchmark RTS Index, fell Wednesday 2.94%, to 1850.09 points, while the MICEX index fell 4.14%, to 1682.12 points.
As of 1:45 p.m. Moscow time (10:45 a.m. GMT) the RTS index had slightly recovered, to 1867.09 points (2.05%).
Most Russian blue chips fell 2-3%.
Boris Alyoshin, head of Russia's Federal Industry Agency, said that the fall could have a negative effect on the Russian economy.
"Insofar as Russian money is invested in international [financial] markets, there could be an impact," he said.
Russian market watchers said there is still hope it will bounce back, but the "spring rally" is likely to be delayed indefinitely.
Yevgeny Tupikin, senior financial analyst with BrokerCreditService, said such a strong downward movement indicates that this is not a one-day correction and that it could continue for the time being.
Yelena Chernoletskaya, head of the analysis department at the European Trust Bank, said the market will not "get off lightly."
"The most negative outcome is that trust in emerging markets has been further eroded," she said, adding that no influx of foreign capital should be expected in the foreseeable future.
According to FK Uralsib analysts, the fall of world indexes was the result of market "bubbles" and will ultimately help "sanitize" the market.
Denis Barabanov, analyst with IK Bitsa-Invest, said the situation has generally stabilized and investors will now be more discriminate, although it is too soon to talk of a new trend.
Denis Filippov, of IK Renaissance Online, said that most experts are not inclined to dramatize the situation, but that the current negative trends will keep the market down for a while.
Other experts predicted further market corrections would continue well into March.
