World stock markets dropped Friday as the US investigated a shock overnight slide on Wall Street, while the Greek debt crisis risked spiralling and Britain faced an uncertain political future. European stock markets mostly fell on Friday but those in the red managed to pull back from initial sharp losses of between two and three percent. At about 1015 GMT, Paris was down 1.38 percent, Frankfurt shed 0.80 percent and London lost 0.50 percent, as investors also reacted to an unclear outcome in Britain's general election where no party had won an outright majority. In Spain, which economists fear is at risk of contagion from the Greek crisis, the main stock index jumped 1.06 percent as official data showed the Spanish economy scraped out of recession in the first quarter of 2010. Earlier in Asia however, Tokyo closed down 3.10 percent, Hong Kong fell 1.06 percent and Sydney retreated by 2.0 percent in value. 'The shocking losses in the US last night have created a bit of a domino effect,' said City Index analyst Joshua Raymond. Japan's central bank on Friday said it would inject more than 20 billion dollars (15.7 billion euros) in liquidity to calm markets in response to global turmoil. 'The scale of collapse in US equity prices and the upturn in yen volatility prompted a response from the authorities in Asia that has helped contain the declines in equity markets there,' said Derek Halpenny at Bank of Tokyo- Mitsubishi. US regulators have launched an inquiry into Thursday's dizzying stock plunge that left market participants shaken in a wave of panic that dented confidence around the globe. The Chicago Mercantile Exchange denied rumours that a dealer there had mistaken billions for millions setting off the record plunge. But the Securities and Exchange Commission and the Commodity Futures Trading Commission said the agencies and exchanges were 'to review the unusual trading activity' and would 'take appropriate steps to protect investors.' A tumultuous session on Wall Street saw the blue-chip Dow Jones Industrial Average drop nearly 1,000 points in a matter of minutes, shaking confidence. The Dow later recovered, closing down three percent or 348 points -- a steep drop under normal circumstances. But spooked traders were left asking what had caused the blue-chip index to erode three months of solid gains. Andy Brooks, a trader at T. Rowe Price, speculated that it was a so-called 'fat finger' trade, in which a trader incorrectly enters data. 'I have no idea why it happened; when it falls that far and fast and bounces back that quickly, you figure it's an error or tech snafu,' Brooks said. World stock markets have also been rocked this week by fears that Greece's debt crisis would spread through Europe. Greek borrowing costs hit a record high on Friday, indicating a massive loss of investor confidence in the financial rescue package for Greece being put together by Europe and the IMF. The yield on 10-year Greek government bonds rose to 11.308 percent in morning trading from 10.932 percent late on Thursday. These rates have blocked Greece's access to bond markets, forcing it to call on loans from the International Monetary Fund and its euro allies. Leaders of the 16 euro nations are set to give their final approval at a summit later on Friday to unprecedented emergency loans for Greece worth 110 billion euros (140 billion dollars) aimed at staving off a debt default. Also occupying investors' minds Friday will be key US employment data. 'Trading is likely to be choppy with investors remaining on edge, particularly ahead of the all important non-farm payrolls data,' said City Index's Raymond. Ahead of the monthly figures, dealers were analysing the result of Britain's general election. Conservatives came top in Britain's close-fought vote but failed to deal a knock-out blow to Labour Prime Minister Gordon Brown, plunging Britain into political uncertainty as its economy looks to recover after a record recession. While Conservative leader David Cameron insisted Brown had lost his mandate to govern, key allies of the prime minister indicated his party would bid to cling to power in a deal with the centrist Liberal Democrats. 'This messy (political) state of affairs is proving unsettling for the markets, with sterling sinking to a one-year low against the dollar and even losing ground against the euro which has been torpedoed by the eurozone debt crisis,' said IHS Global Insight analyst Howard Archer. The British pound plunged to 1.4476 dollars at 0930 GMT -- its lowest level since April 2009. The euro meanwhile hovered around a 14-month low against the dollar. 