LONDON — World stock markets fell sharply Friday, as Wall Street headed toward its eighth straight day of losses over fears the global economy is set for a protracted recession.

Asian shares began the trading day with steep drops, and Russia's markets never opened. At one point, European and U.S. shares appeared to be in free fall Friday afternoon London time, when the Dow Jones index on Wall Street opened a breathtaking 7 percent lower — below the 8,000 level.

A partial recovery in the U.S. helped European shares recover some ground. Following the Dow's modest recovery, the FTSE ended 381.74 points, or 8.9 percent, lower at 3,932.06, the first time it has ended below the 4,000 level in five years. Germany's DAX ended down 342.69 points, or 7.0 percent, at 4,544.31, while France's CAC-40 was 266.21 points, or 7.7 percent, lower at 3,176.49.

All three indexes had been even lower when Wall Street opened.

In spite of the huge bailout in the U.S., Britain's plan to buy up stakes in troubled banks, coordinated interest rate cuts around the world and massive central bank liquidity provisions, the sell-off in stock markets shows no signs of abating so long as lending rates between banks remain elevated.

That means banks are afraid to lend to each other, and raises the chance that they and other businesses won't get the credit they need to operate.

At the bell, the Dow briefly dipped nearly 700 points, to below the 8,000 point level, amid rising fears of the depth of a global recession before some bargain hunting helped it recoup some losses. By late-afternoon London time, the Dow was 363.28, or 4.2 percent, lower at 8,215.91.

Smaller markets also took a beating. Trading was suspended at various times in Austria, Russia, Iceland, Romania and Ukraine while Milan suspended share dealings in nearly half of its stocks because of excessive losses.

And the Ibovespa stock index in Brazil was down 6.5 percent at 34,675 at midmorning. Earlier, trading was automatically halted for 30 minutes because of a "circuit breaker" rule that kicks in when the Ibovespa loses 10 percent.

Italian Premier Silvio Berlusconi raised the prospect Friday that world leaders might consider suspending stock markets in response to the financial meltdown. U.S. and Japanese markets are closed on Monday because of public holidays.

The solutions to the crisis will have to be "global and innovative," Berlusconi said. "There is talk of suspending the markets" while international financial rules are "rewritten."

In Japan, the benchmark Nikkei 225 index in Japan 881.06 points, or 9.6 percent, to 8,276.43, its lowest closing level since May 2003. It was its biggest one-day percentage loss since the stock market crash of October 1987 and meant that the Nikkei lost nearly a quarter of its value during the week.