European equities edged higher on Friday as the G20 attempted to calm markets after the recent rout, but sentiment was plagued by global economic woes and the eurozone debt crisis centred on Greece.

Asian indices fell for a second straight day on Friday, after more losses on Wall Street, on the back of growing fears that the global economy is on the verge of slipping back into recession.

But the London stock market gained 0.67 percent to 5,075.17 points in morning deals, after briefly flirting with negative territory, following the biggest one-day points drop since November 2008 on Thursday.

Frankfurt added 0.44 percent and Paris advanced by 0.62 percent, while Milan won 1.70 percent and Madrid climbed by 1.11 percent.

In foreign exchange trade, the European single currency rose to $1.3527 after striking an eight-month low at $1.3385 the previous day. The euro also gained to 103.23 yen, after hitting a ten-year low at 102.22.

Global equities had slumped Thursday as fears mounted that the world was heading for a fresh economic downturn, sparking a rush for safe-haven assets like the dollar and yen.

The mood darkened after the US Federal Reserve warned of serious downside risks to the world's biggest economy, which sent investors fleeing to safe-haven currencies and assets.

"After yesterday's rout across the financial markets, I expect a small rebound today as opportunist traders step in and snap up 'cheap' stocks," said ETX Capital trader Manoj Ladwa.

"But expect any bounce to be short-lived as those same traders are unlikely to want to hold any significant positions over the weekend."

The Group of 20 major economies vowed Friday to mount a powerful response to the rising challenges facing the world economy as it reels from the fast-moving debt crisis in the eurozone.

The pledge, made in an unexpected statement late Thursday, came after world leaders ramped up pressure on Europe to take decisive action to contain its debt crisis as markets spun out of control.

It failed to soothe Asian markets, however, which plummeted for a second straight day as the dollar rose against regional currencies, following heavy losses in the United States and Europe.

"G20 finance ministers passed up a golden opportunity to soothe the markets as talk of tackling the financial crises fell short of any decisive action," added Ladwa.

"Highlighting the obvious fragility of the financial system without clear cut measures to avert a meltdown is unlikely to instill confidence in investors."

Europe's major stock markets had tumbled on Thursday, with Paris falling 5.25 percent and Frankfurt diving 4.96 percent.

London sank 4.67 percent or 246.8 points -- which was its largest one-day points fall since November 2008.

Milan slid 4.52 percent and Madrid tumbled 4.62 percent on fears that Italy and Spain could fall victim to the fast-moving eurozone crisis.

"The severity of the deterioration in the financial system really hit home yesterday, with market turbulence in many respects culminating during the day at their worst levels since the purges of 2008," said Stephen Gallo, head of market analysis at Schneider FX.

"To see some indicators from Europe now back at their lowest levels since the height of the post-Lehman economic contractions (early 2009) did just add to the gloom, it added to the hysteria and the rush to price in an extended period of weakness," added Gallo.

In Asia on Friday, Seoul slumped 5.73 percent, while Hong Kong gave up 1.32 percent. Sydney dropped 1.56 percent, Taiwan fell 3.55 percent and Shanghai lost 0.41 percent, while Tokyo was closed for a public holiday.

On Wall Street, the Dow had slumped 3.51 percent -- marking its worst two-day fall since November 2008.

The Fed warning came after it announced a $400-billion plan to boost the economy and shift its shorter-term debt portfolio to longer-term bonds in a bid to lower long-term interest rates, a move that disappointed markets.

The central bank's forecast piled the pressure on investors, who are already on red alert over heightened fears that Greece is on the verge of default -- which could infect other economies and spark another global financial crisis.

"No doubt the 'ground zero' of the whole issue lies with the European debt crisis and while the outlook for Greece lies at the centre of that," said Lloyds Banking Group economist Charles Diebl.

"It is arguable that the 'crisis' has somewhat moved on and the scale of the solution has multiplied as a result.

"Indeed, if there were a quick and neat solution to Greece at this point, policy makers would surely take it in the hope that it would have a positive cascade effect on the confidence and the perceived risk to the macro outlook."