MANILA, Philippines (UPDATE) - Local stocks suffered their worst plunge in almost three years on Friday due to growing fears that the world economy may slip back into recession.

The key Philippine Stock Exchange index (PSEi) plummeted 5.1% or 210.14 points to 3,885.96. The broader all-share index sank 4.6% or 134.24 points to 2,782.30.

PSE data showed the decline was the steepest since October 27, 2008, when the PSEi fell 12.3% or 239.66 points.

Massive sell-off was seen across the rest of the world's markets following the US Federal Reserve's comments that the US economy faced "significant downside risks."

The warning came after the Fed announced a $400-billion stimulus plan, which failed to calm panicking investors.

On Wall Street, the Dow slumped 3.51% -- marking its worst two-day fall since November 2008 -- the S&P 500 sank 3.19% and the tech-heavy Nasdaq Composite shed 3.25%.

The Fed's forecast added to concerns over the eurozone's debt problem which is feared to have spread to other economies.

At home, traders expect the market to fall further, but they said it was already close to the bottom.

"We're not very far from the bottom. Why do I say that? Because we saw today volume of P8.2 billion, on the downswing, once volume expands, that is a sign of support," said IGC Securities president Ismael Cruz.

Nearly 14 billion shares worth P8.195 billion were traded on Friday. Losers thumped gainers, 166 to 13, while 15 issues were unchanged.

All subindices retreated, led by the mining and oil sector, which plunged 9.8%.

Cruz said the market may consolidate on the 3,700 level. - With reports from AFP and ANC