Global stocks plunged further after the move to restrict travel to the US from Europe, while EU leaders said President Trump's decision was made without consultation.
Trump restricted certain travel from Europe to the United States in a televised address about the health crisis on Wednesday, shocking investors and travellers, and disappointing traders hoping to see broader measures to fight the virus.
Trading on Wall Street was halted for 15 minutes shortly after the open in New York after the S&P 500 index fell more than 7 percent. In later trading all three main indexes were almost 10 percent down.
"It's not just the fear of the economy going weak, but basically being on the brink of shutting down," said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas. "It's mass selling across the board (and) we are pricing in a potential to go into another financial crisis."
Trump said the United States would suspend all travel from Europe, except the United Kingdom and Ireland, for 30 days starting on Friday. He later said trade would not be affected by the restrictions.
Though the UK was excluded from the travel ban, fears were widespread over the impact on the travel sector and the FTSE 100 in London closed the day nearly 11 percent down - its biggest one day fall since October 1987.
The European Central Bank approved fresh stimulus measures and temporarily dropped banks' capital requirements to help the euro zone cope with the shock of the pandemic, but kept interest rates on hold, disappointing markets. European shares plunged 11.5 percent in their worst daily loss on record.
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EU leaders accusing Trump of making the decision "without consultation".
The Covid-19 pandemic is a "global crisis", said European Commission presidents Ursula von der Leyen and Charles Michel.
It "requires cooperation rather than unilateral action," they said.
The ban affects only countries that are members of the Schengen border-free travel area and does not affect US citizens, the UK, or Ireland.
It is a major escalation in the response to Covid-19 by Mr Trump, who has been accused of inaction. However, the ban was met with frustration in Washington as well as abroad.
On Thursday, the US leader said he did not inform his EU counterparts because "it takes time".
"We had to move quickly," Mr Trump said, adding that the EU did not consult the US when raising taxes on American goods.
Trump said Britain was excluded from the travel ban because it is "doing a good job in tackling the coronavirus". The US may extend the travel ban beyond the proposed 30-day period, but it could also shorten restrictions, he said
More than 1300 confirmed cases of the virus have been reported in the US, with 38 deaths so far.
Italy now has over 12,000 confirmed cases and 827 deaths, second to China. France, Spain and Germany have also seen a rise in cases.
Announcing the ban from the Oval Office on Wednesday night, Mr Trump accused the EU of failing to take "the same precautions" as the US in fighting the virus to justify the ban.
Stocks plummeted following Mr Trump's announcement, in which he said that the travel ban would also include trade and cargo. The statement was later retracted.
European parliamentarian Guy Verhofstadt drew attention to other US concerns: "Instead of a travel ban for Europeans, Trump should make a decent health care system that works for all Americans: paid sick leave and Medicare for all."
Senior Democrats said it was "alarming" that President Trump had not addressed a shortage of coronavirus testing kits in the US.
House Speaker Nancy Pelosi told reporters on Thursday she found the ban "strange" as it was easy to travel to the UK from the countries affected by the ban.
- BBC / Reuters