(CNN) -- Japan's Nikkei fell more than 10 percent before reeling back Thursday, as Asian and Pacific stock markets dropped dramatically a day after Wall Street took a tremendous tumble amid a series of bad news.
Hong Kong's Hang Seng slumped 6.5 percent in early trading, as did as did South Korea's KOSPI index. Australia's All Ordinaries index fell nearly 6 percent. The Shanghai Composite fell 3.5 percent.
At midday, Japan's Nikkei was down more than 9 percent.
On Wednesday the Dow Jones fell 733 points, or 7.9 percent, to 8,577, the second largest daily point loss ever, behind the 777-point loss on September 29. The Nasdaq lost 8.5 percent and the S&P nine percent.
The drop on Wall Street came amid the worst U.S. retail sales figures in three years, a surge in UK unemployment and predictions that recessions were unavoidable in the U.S. and Europe.
The FTSE 100 closed the day 7.16 percent down, while the CAC 40 in Paris lost 6.82 percent of its value and the German DAX 30 fell by 6.49 percent. Watch whether people think a recession is already under way »
The falls came as EU leaders met in Brussels to hammer out the details of their $2.7 trillion banking bailout.
Leaders from the 27-nation European Union were meeting Wednesday and Thursday in the hope further agreement on their approaches will give markets more confidence. Watch what's transpired »
Proposals include a guarantee on bank deposits worth up to €100,000 ($136,760).
Britain, Germany, France, the Netherlands, Spain and Austria have already agreed to buy shares in banks and pump huge sums of money into lending markets in an effort to restore confidence and make credit readily available again. Read timeline of the crisis
Before the meeting, British Prime Minister Gordon Brown said the world had to work together to solve the economic crisis and called for global talks this year to reform the world's financial system. Watch more on Brown's political recovery »
He said a global summit could be held in the next few months despite lack of agreement among international leaders.
Brown appealed to the other countries to join Europe's bailout plan, which he said was key to unfreezing bank lending and softening any economic downturn stemming from the difficulties banks were having.
The U.S. federal government has a similar plan to get capital directly into banks by buying their stock.
U.S. Federal Reserve Chairman Ben Bernanke warned Wednesday the economy will take some time to recover even if the credit markets return to normal soon.
"Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away." he said.
European Commission head Jose Manuel Barroso has called for supervision of hedge funds and private equity, and action against "short-termism" and "perverse incentives."
Barroso said some governments still opposed a more coordinated European approach. Watch European Central Bank chief discuss the crisis »
"I hope that now the spirits are more open to the need for that more coordinated approach."
Leaders of EU nations outside the euro-zone -- such as Sweden, Denmark and Poland -- are being asked to endorse the banking rescue package.
The Czech Republic and some other eastern EU countries are complaining about the plan however, arguing they cannot afford to offer the same level of guarantees to account holders as richer EU members.