"The only way the Americans have come up with to improve economic growth has been to take on new loans to repay the old ones," a blistering commentary published on the official Xinhua news agency said.

"To eat May's grain in April, however, will never be a permanent solution to a problem," the report said.

China warned on Wednesday that Washington's efforts to raise the US limit on borrowing had failed to defuse America's "debt bomb" and signalled that Beijing would further diversify its holdings away from the dollar.

After months of bitter negotiations with his Republican rivals, US President Barack Obama finally signed an emergency bill on Tuesday that averted what would have been a disastrous debt default for the world's biggest economy.

Beijing's latest comments rounded on Thursday's 500-point drop in the Dow Jones industrial index, noting that it had exposed "the plight of western economies and their deep structural defects."

"The United States has long been maintaining economic growth and excessive consumption by means of debt financing, hence masses of economic bubbles, which eventually triggered the financial crisis," the commentary said.

The commentary also took aim at the European Union, whose members recently constructed a deal to stave off a sovereign debt crisis in Greece in fear that it would be a harbinger to a wider and deeper credit malaise in the eurozone.

"The current bailouts offered by international bodies such as the EU are in a sense, to 'rob Peter to pay Paul'," it said.

"Only by introducing reform can they save themselves; only with a sound economic structure can they assume responsibility for the world economy."

German Chancellor Angela Merkel, French President Nicolas Sarkozy and Spanish Prime Minister Jose Luis Rodriguez Zapatero scheduled conference calls to look at further emergency measures amid speculation the EU was increasingly boxed in over the eurozone debt crisis.

Dealers speculated the market falls were at least partly in response to conflicting signals from Europe that the eurozone debt crisis could be spinning out of control.

European Commission President Jose Manuel Barroso sent alarm bells ringing after he voiced fears Thursday the eurozone crisis might be spilling out of the so-called eurozone periphery -- Greece, Ireland and Portugal.

Market analysts immediately saw the comment as a reference to Italy and Spain, already top of the eurozone danger list.

Other European officials deplored Barroso's comments as ill-timed, with the Germans reported to be livid over what they saw as unwarranted words reversing the gains made after the July 21 summit.

Participants at that meeting agreed on a second bailout for Greece and greater flexibility for the European Financial Stability Facility, a rescue fund set at around $625 billion but already seen as inadequate.

Barroso also called for increasing the rescue fund to deal with a crisis from the eurozone contagion reaching other member countries. But that comment too didn't go down very well, as resistance to the existing level of the bailout reserve fund is already palpably strong and more cash needs are hard to predict amid emerging risks of multiple crises hitting the eurozone.

Eurozone traders also gave a lukewarm welcome to the European Central Bank's much-trumpeted bond rescue moves Thursday. ECB bought Irish and Portuguese government bonds but skipped the Italian and Spanish debt, sending an apparently unintended signal to traders the two countries' bonds weren't as attractive.

ECB President Jean Claude Trichet called the move "a supplementary refinancing operation" in response to "renewed tensions in some financial markets."

Some European officials insist the current downturn is mostly a response to poor prospects for growth in the United States and the fact that the U.S. borrowing limit deal has turned the markets' attention back to the eurozone, where problems persist and seem to be multiplying despite the July deal over Greece.

British regulator Bank of England, meanwhile, left its main interest rate at a record low 0.50 percent Thursday for the 29th month amid a weak economic growth outlook for Britain and market turmoil worldwide.

Britain's economy is struggling to absorb deep budget cuts and the latest data indicated that it slowed to a trickle -- 0.2 percent -- in the second quarter this year. This was after the index was partly affected by the April 29 wedding of Prince William and Kate Middleton.

The British central bank seems in no mood to inject more cash for fear of exacerbating the annual inflation rate, at 4.2 percent already more than double the target of 2 percent set by the central bank.

But economists say the unfolding crisis in the markets may force the hand of Bank of England, too.