"The markets are beginning to recognise that the Asian financial crisis has evolved into a global crisis and is having perceptible effects on industrial economies," said George Magnus, the chief economist at SBC Warburg.
He and other analysts remain unclear about whether Friday was the start of the long-threatened bear market or another bout of turbulence in increasingly volatile but fundamentally upbeat trading.
However, James Mitchell, a global strategist at Nomura, struck a sombre note declaring "potentially, it looks pretty serious."
Mr Mitchell hedged his bearishness by pointing out the Dow could rally 2-3 per cent tomorrow, lifting European markets. But he also said: "There's a lot of talk about a market correction. This could snowball and become a crash."
The FT-SE 100 stock index was down on Friday 190.4 to 5,477, its biggest one-day fall since 1987. The Dow Jones Industrial Average also flirted with disaster, dipping 280 points, before closing down 77.76, or 0.9 per cent, at 8,533.65.
Continental Europe was also hit hard. Key indexes for many local bourses were down between 3 and 4 per cent, while Germany's Dax closed 5.9 per cent lower as German bankers and representatives from Russia's stricken government and banks met in Frankfurt to discuss the financial crisis in Moscow.
The market is still reacting to the announcement last Monday that Russia was defaulting on $45bn in treasury bonds and devaluing the rouble 34 per cent. But on Friday the focus of fears moved to Latin America, where Russia's problems and the weak oil price combined to spark rumours that Venezuela and possibly Brazil were about to devalue their currencies.
Investors have been bailing out of emerging markets since last October. But they are now bailing out of shares on the biggest exchanges to pile defensively into bonds.
"You can't see the Asian financial crisis in the US economic figures yet," said Mr Magnus at SBC Warburg. "But it's there in the earnings figures of US companies - and it's there in the figures showing US companies are not investing."
Mr Magnus raised the possibility of a vicious circle in which lower earnings by US companies leads to lower share prices, which in turn would lead to lower consumer spending in the US and even lower company earnings.
"I think the next move by the US Federal Reserve Bank will be to ease interest rates," he said.
But London could benefit from global turmoil if investors judge it a safe haven against an overvalued US market.