Oil prices reached a new record of 41.50 dollars per barrel in London and an historic peak of 44.77 dollars in New York in pre-opening electronic deals on Friday, even though OPEC president Purnomo Yusgiantoro said the cartel was prepared to increase output to help to cool the market.

London's Brent North Sea crude oil for September delivery later traded at 41.15 dollars in early deals.

European stock markets meanwhile tumbled in trading in the wake of heavy falls on Wall Street and losses in Asia, caused by the surge in oil prices which analysts warned threatens to put the brakes on a global economic recovery.

"Stock markets have fallen sharply over the past 24 hours as fresh all-time highs for oil futures prices continue to be set and concern grows over the impact of high oil prices on economic growth," analysts at Barclays Capital said in a note to clients.

The most severe losses were seen on Wall Street, where the blue-chip Dow Jones industrials average slumped 1.61 percent to 9,963.03 points Thursday, the first close below 10,000 since July 26.

The broader Standard and Poor's 500 index dropped 1.63 percent to 1,080.70 points and the tech-heavy Nasdaq market index tumbled 1.80 percent to 1,821.63.

It came as New York's benchmark oil contract closed at a record settlement of 44.41 dollars per barrel on Thursday.

Surging oil prices weighed also on Asian stock markets, with Tokyo's benchmark Nikkei-225 index closing 0.80 percent lower on Friday at 10,972.57 points, the first time it has ended below the 11,000 mark in some 10 weeks.

Hong Kong's key Hang Seng Index dropped 0.11 percent to 12,478.68 points.

"The oil price is remaining a factor, certainly that was a key factor in depressing Asia overnight," Mike Lenhoff, chief strategist at Brewin Dolphin Securities said.

"The Asian market is much more reliant on oil imports than some of the others," he added.

High oil prices are threatening Asian growth because the region is highly dependent on imported crude to power its industries, analysts warn.

European stock markets fared little better Friday, as the British FTSE 100 index lost 0.51 percent to 4,390.70 points.

The German DAX 30 shed 1.36 percent to 3,777.13 points and the French CAC 40 slid 0.83 percent to 3,593.02.

Analysts believe the surge in oil prices, resulting in higher inflation growth, will force central banks to push up interest rates, in turn threatening to take the steam out of a global economic recovery.

But on Thursday, the European Central Bank held its key interest rates unchanged at 2.00 percent.

The Bank of England raised its rates, however, for the fifth time since November by a quarter point to 4.75 percent to prevent the British economy from overheating faced with record high consumer debt.

The bank did not refer directly to energy prices in its reasons for hiking the cost of borrowing, but noted that inflation in Britain picked up to an annual rate of 1.6 percent in June -- the highest level since March 2003.