In the US the Standard and Poor's 500 index saw its biggest daily percentage drop in nearly four years on fears of a global slowdown following reports of a manufacturing slowdown in China. The S&P 500 lost 5.8 percent for the week, its worst weekly slump since 2011.

The last time the US markets corrected was in October 2011.

Friday had seen market falls in Asia continuing the trend which began the previous week after China announced a surprise devaluation of its currency, the yuan. On Friday a private survey showed a drop in manufacturing in China.

Caixin's purchasing managers' index came in at 47.1 this month, falling from 47.8 in July and constituting the worst reading in over six years. A figure below 50 means contraction of the economy.

The Shanghai Composite index dropped 4.3 percent on Friday to finish the week down 11.5 percent - its worst week since 2011. Japan's Nikkei 225 lost 3 percent, South Korea's Kospi shed 2 percent and Hong Kong's Hang Seng fell 1.5 percent in Friday trade.

In a note to clients, Fidelity's asset allocation director commented: "We have a challenging economic situation in China, which has now taken the extreme step of devaluing its currency to support its economy. That weakness is ricocheting through emerging markets and the global industrial sector."

In Europe, markets finished the week with heavy losses on Friday. Germany's DAX lost 2.9 percent, France's CAC-40 fell 3.2 percent and in Britain, the FTSE 100 index dropped 2.8 percent.

US oil prices were in the $40 range due to global oversupply as well as worries over China. Brent crude was traded at its lowest level since March 2009 and finished the week at just above $45 a barrel.

US government bond prices rose, pushing the yield on the 10-year Treasury note down to 2.04 percent. Gold gained $6.40 to settle at $1,159.60 an ounce.

jm/bw (Reuters, AFP)