The New York Stock Exchange found some stability on Tuesday after Monday's record-breaking loss. The Dow Jones Industrial Average closed the day down just 17 points at 8,903, a fall of 0.2 per cent. The Nasdaq composite index fell 1.5 per cent.
However the downturn paled in comparison to Monday's dramatic falls when shares plunged 7.1 per cent in the Dow's biggest-ever points loss.
Earlier European share prices slumped as another round of interest rate cuts failed to ease concerns over the prospects of military strikes against Afghanistan's ruling Taliban.
The Bank of England cut rates by a quarter of a per cent following Monday's lead by the United States Federal Reserve and the European Central Bank. The Bank of Japan also announced it was cutting its discount rate from 0.25 to 0.1 per cent.
London's FTSE 100 index, which at one point in the day fell 126.7 points, finished 50.2 down at 4848.7, a fall of just over one per cent.
As Wall Street rallied during the late afternoon, France's CAC-40 index also improved slightly, closing the day down 1.1 per cent at 3970.2. Germany's DAX index was also down a little under one per cent at 4,194.9, after trading as much as 2.66 per cent lower at one stage. The Swiss Market Index ended up 1.2 per cent down at 5734.5.
The dollar resumed its fall against major currencies, shedding as much as half a per cent against the yen, following the rate cut by the Bank of Japan.
The Swiss franc was the chief beneficiary of the increased uncertainty in global markets, pushing the currency to all-time highs of around 1.4810 against the euro. It traded around 1.5980 against the dollar, up around half a per cent on the day.
"A continued reduction of exposure to global risk is helping the Swiss franc," said Kamal Sharma, currency strategist at Commerzbank.
swissinfo with agencies