Financial markets have slumped amid fears that an uptick in coronavirus cases will hurt the economic recovery.
The falls come a day after America’s central bank said the US faces a long road to recovery.
In the US, the three main financial indexes saw their worst day in weeks, with the Dow Jones Industrial Average down more than 5% at mid-day.
The steep falls follow a weeks-long rally that had helped shares recover some ground from March lows.
European shares also dropped, with the UK’s FTSE 100 sinking about 4%.
Energy and travel stocks were among the biggest losers, as oil prices also took a hit.
The falls came as Arizona and South Carolina were among several states in the US where the number of cases was on the rise.
Hopes that the economy will rebound, as authorities loosen the tough controls put in place to try to slow the spread of the virus, helped lift share prices from their March lows. The Nasdaq has even hit new highs this week.
But Federal Reserve Chair Jerome Powell warned this week that the US faces a “long road” to recovery.
On Thursday, the US Labor Department reported that another 1.5 million people had filed new unemployment claims last week. More than 30 million continue to collect the benefits, it said.
Policymakers at the Fed said they expected the unemployment rate to remain above 9% at the end of the year – close to the worst level of the financial crisis.
Should infection and hospitalisation rates worsen, it will hurt the recovery, Mr Powell said.
Treasury Secretary Steven Mnuchin said he did not want to see a return of the lockdowns that kept the world’s largest economy frozen for weeks this spring.
But economists have warned that people will stay home voluntarily if they are afraid of getting sick.