Investors have been gripped by an increasing sense of unease this week, largely because of the uncertainty related to China. Since early summer, Chinese stocks have taken a battering but global markets haven't responded much '€” until now.

Following last week's decision by the country's monetary authorities to reduce the value of the yuan, China's currency, stock markets have really taken a hit.

The devaluation of the yuan has fueled concerns about the outlook for the world's number 2 economy as well as clouding the prospects of other emerging economies in Asia '€” the lower yuan will make their exports less competitive weighing on growth.

Over the past few months, Chinese stocks have recorded big losses after a series of disappointing economic data raised concerns over the economic outlook. Another weak manufacturing survey on Friday only added to those concerns, prompting further selling in Shanghai and across the globe.

"China has been on a mission to keep up the illusion of a gradual slowdown, but dealers aren't buying it anymore," said David Madden, market analyst at IG.

KEEPING SCORE: In Europe, France's CAC-40 declined 1.3 percent to 4,724 while Germany's DAX fell 1.4 percent to 10,288. The FTSE 100 index of leading British shares was down 1.2 percent at 6,292. U.S. stocks were poised for further falls at the open, with both Dow futures and the broader S&P 500 futures down 0.2 percent. On Thursday, the S&P had its worst day since February 2014.

CHINA JITTERS: The main reason behind the turmoil in financial markets, which has also seen oil and commodity prices slide further, has been unease over China. On Friday, the preliminary version of the Caixin purchasing managers' index '€” a gauge of business activity '€” fell to an unexpectedly low 47.1 points from July's 47.8 points on a 100-point scale on which numbers below 50 show a contraction. The Shanghai Composite Index suffered another steep drop of 4.3 percent to 3,507.74 points

GREECE BACK TOO: Concerns over Greece following Tsipras' decision to resign reinforced the selling trend. The country, which earlier this week got its hands on the first tranche of cash from its third international bailout, looks headed for another election on Sept. 20 provided opposition parties can't form a new government. Tsipras is hoping to capitalize on his personal popularity in the election as he seeks a new mandate to govern.

ANALYST TAKE: "While the decision to have a new vote is likely to increase political uncertainty in the short term, a fact acknowledged by Moody's the ratings agency, the hope is that the more dysfunctional members of his government will get pushed to the sidelines," said Michael Hewson, chief market analyst at CMC Markets.

ASIA'S DAY: The selling in Asia wasn't just confined to China. Tokyo's Nikkei 225 was off 3 percent at 19,435.83 while Seoul's Kospi shed 2 percent to 1,876.07 and Hong Kong's Hang Seng retreated 1.5 percent to 22,409.62.

ENERGY: Worries over the scale of the slowdown in China weighed on oil prices too '€” lower growth equates to lower demand. The benchmark U.S. crude fell 13 cents to $41.19 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, which is used to price international oils, shed 33 cents to $46.29 in London.

CURRENCY: The dollar was also soft, with the euro up 0.4 percent at $1.1277. The dollar was also 0.6 percent lower at 122.73 yen.

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