A plummeting Turkish lira sent ripples through global equities and emerging markets on Friday, as rising fears of a wider fallout sent investors scurrying for the safety of assets such as the yen and USA government bonds.
Turkey's currency hit a record low against the United States dollar and euro early on Friday, falling around 7% against the dollar after initially losing 12%.
Today's declines have dragged down European shocks, with the Stoxx Europe 600 falling three per cent on its exposure to banks and miners.
The pound was up 0.15 per cent against the euro but was down 0.5 per cent against the dollar, taking it to a 13-month low.
Turkish President Recep Tayyip Erdogan has lashed out against a shadowy worldwide "interest rate lobby" which he suggested was "campaigning" to harm Turkey's economy, after the lira fell more than 14 percent overnight.
The Turkish Lira and Russian Ruble are struggling after both countries were recently hit by fresh USA sanctions. Wall Street was set for a weak open.
As investors piled into "safe" bonds, German yields hit three-week lows and yields on US 10-year Treasuries fell to 2.8913 percent.
A new analysis by Berenberg Bank sees little long-term impact of high Turkish inflation and low interest rates on eurozone gross domestic product (GDP) growth.
He added that investors were becoming increasingly anxious about rising inflation in Turkey and the ability of the country's central bank - whose independence has been questioned by investors - to do anything about it.
Adding to emerging market currency woes was the Russian rouble, RUBUTSTN=MCX weakened to 67.12 to the dollar. Spot gold XAU= fell 0.3 percent to trade at $1,207.15 per ounce.
"Other EM currencies have held their ground against the dollar, having generally been weakening previously", said analysts at Capital Economics. "Don't forget this: if they have got dollars, we have got our people, our right, our Allah", he was cited as saying.
In commodities, USA crude oil rose 0.25 percent to $66.99 a barrel, while Brent crude was 0.4 percent stronger at $73.33 per barrel.