Fresh panic selling has swept global stock markets amid investor fears that Greece's debt crisis could halt the global economic recovery.
Investors are worried that Britain won't be able to move fast enough to reduce its massive budget deficit unless it can form a new government quickly.
The leader of Britain's Liberal Democrats, Nick Clegg, will seek backing from senior party members for a possible deal with the Conservatives, who won most seats in this week's election but failed to secure an overall majority.
The biggest hurdle to a deal is agreement on the pace of lowering Britain's record public debt.
Meanwhile stocks in the United States turned negative on Friday on fears of another credit crisis stemming from Greece's finances.
The Dow Jones index closed down 1.3%, while the UK's FTSE 100 shed 2.6%.France's Cac 40 fell 4.6%, and Germany's Dax lost 3.3%.
Sterling also fell sharply against the dollar and the euro as results poured in from the UK general election.
The volume of shares traded in the US was the second highest this year.
European leaders try to stem financial turmoil
The cost of protecting European bank debt against default by Greece has reached levels not seen since the height of the economic crisis.
Leaders of the 16 countries that use the European single currency have approved an unprecedented loan to Greece of $195 billion over three years.
Eurozone nations say they will have special measures ready before financial markets open on Monday to prevent the financial turmoil in Greece spreading to other countries such as Spain and Portugal.
The leaders say they face an extraordinary situation and they are ready to take whatever steps are needed to protect the stability of the euro area.
They have also agreed to reinforce the rules governing their own national budgets and to set up an emergency fund that all eurozone nations may dip into when in difficulty.
The proposals will be presented to all 27 European Union finance ministers for approval during the weekend.
