Dow Jones closed 4.6% lower
Japan's economy grew less than expected at the end of last year, highlighting potential weaknesses in Prime Minister Abe's economic policies.
UK shares had a shaky start to the week as negotiations over the US debt ceiling continue to drag on.
The Federal Reserve last night indicated it has no plans to tone down its quantitative easing programme in the near future, arguing the US economy is not in a strong enough position to turn off the liquidity taps.
Global markets soared on Wednesday after the US Federal Reserve inadvertently released minutes from its latest policy meeting five hours earlier than planned.
(Updated 11:15am) The FTSE 100 is trading more than 1% higher in mid-morning trading on Tuesday afte closing 2011 down 5.5% for the year.
Markets moved lower on Monday as fears over Greece and Italy remained despite the imminent formation of a Greek coalition government.
The Dow Jones and S&P 500 surged yesterday as market sentiment was lifted by US growth almost doubling in Q3.
News that Greece will fail to meet deficit reduction targets pushed the FTSE 100 down 2.8% at open, dragging it below 5,000 points.
Stocks in the US and Asia rallied overnight after Italy turned to China for help with its debt crisis.
Gold soared above $1,900 for the first time overnight as investors continue to flock to the precious metal amid ongoing turmoil in financial markets.
The UK's index of 100 leading shares fell 2.76% to below 5,000 this morning, as global markets showed no signs of shaking off fears the West is heading back into recession.
Global markets are down this morning as investors vent their concern at eurozone leaders' "disappointing" efforts to stop the debt crisis.
The FTSE opened more than 2% higher on Thursday after the Dow Jones shed 520 points lower in overnight trading amid concerns that France would become the next economic superpower to lose its AAA rating.
Update (1:07pm): The FTSE briefly joined the bear-market club on Tuesday before regaining most of the day's losses as global markets continue to experience extreme volatility.
The FTSE has had a bright start to trading with a host of financials enjoying early gains.
Japan's leading share index extended its winning streak to six days overnight, it's longest spell of consecutive positive returns since March's earthquake and tsunami.
London's leading share index edged higher in early morning trading, after disappointing results from Royal Dutch Shell yesterday dragged the FTSE down to close below 6,000.
London's leading share index fell below 6,000 points in early morning trading, dragged down by a flat finish in US markets and continuing turmoil in Egypt.
Leading Tokyo shares fell on Friday after ratings agency Standard & Poor's (S&P) downgraded Japan's creditworthiness.
UPDATE 12pm: The FTSE is 20 points higher while other key European markets have jumped 1.3% on news Portugal has succeeded in raising £1bn in a bonds auction, easing concerns over the country's need for an EU bailout.
The FTSE advanced 40 points in early trading on Tuesday as investors were buoyed by news of US tax cuts, but European debt fears were keeping a lid on sentiment ahead of the Irish budget.
The FTSE 100 advanced 0.67% or 38.68 points to 5,771.51 as investors responded positively to news Ireland has agreed to a bailout.
The FTSE 100 dropped 0.49% or 28.19 points to 5,768.68 in early morning trading, as fears of lower demand from China dragged down mining stocks.