Following big losses on Wall Street and Asian markets, French shares plummeted in early trading on Friday, with the benchmark CAC 40 tumbling more than 10 per cent before recovering slightly.

After one hour of trading, the index had given up 7.68 per cent, to 3,178.42, with all 40 listed shares in the minus column.

According to Benoit Debroissia, market analyst at Richelieu Finance in Paris, "We are going through a systemic shock in which risk propagates itself through the entire financial system like a virus."

The main problem, he said, was that "confidence in the banking system has completely disappeared. (The banking system) does not seem to work any more. And without an efficient banking system, economies do not work."

Debroissia said that markets around the world continued to suffer because the solutions so far introduced by governments have been "too diffused, too inefficient and have come too late to re-establish confidence."

He suggested that radical measures would have to be undertaken, such as the Irish government's decision to guarantee all savings deposits in the country's six-largest banks or a massive injection of state funds into the banks, "a de facto nationalization."

Banks were among the big losers in Paris on Friday morning, with Societe Generale off 11.54 per cent, to 50.86 euros, and Credit Agricole losing 9.5 per cent, to 11.77 euros.

In addition, insurance giant Axa fell by 9.59 per cent, to stand at 17.38 euros.