Barclays Plc and Royal Bank of Scotland Group Plc led banks lower, sliding more than 4 percent, after the Organization for Economic Cooperation and Development reduced its outlook for global growth and predicted an ``extended period of financial headwinds.'' Intel sank 5.7 percent in Germany.
Europe's Dow Jones Stoxx 600 Index lost 1.1 percent to 202.90 at 1:20 p.m. in London, pushing this year's retreat to 44 percent. The OECD forecast comes after a report showed Germany entered its worst recession in at least 12 years.
Futures on the Standard & Poor's 500 Index added less than 0.1 percent, gyrating between gains and losses as speculation the Federal Reserve may cut interest rates to boost economic growth offset lower forecasts from Intel and Wal-Mart Stores Inc. The MSCI Asia Pacific Index sank 4.7 percent.
National benchmarks fell in 11 of the 18 western European markets. The U.K.'s FTSE 100 lost 1.2 percent. Germany's DAX gained 0.1 percent, and France's CAC 40 increased 0.3 percent.
Russia's Micex Index fell as much as 17 percent and was 7.5 percent lower at 3:05 p.m. in Moscow after it reopened following a 30-minute trading suspension. A court in Kuwait ordered a shutdown as traders lobbied for support after a sixth day of declines. The MSCI Emerging Markets Index slid 4.7 percent.
Japan stocks fell to a two-week low as earnings forecasts in the U.S. indicated the world's biggest economy is weakening, and reports Japan's biggest banks may sell new shares raised dilution concerns. The Nikkei 225 Stock Average dropped 456.87, or 5.3 percent, to close at 8,238.64 in Tokyo.
Australian stocks plunged, led by banks and resource companies, after Commonwealth Bank of Australia said bad debts may double, the U.S. Treasury scrapped plans to buy mortgage assets, and metals prices dived. Australia's benchmark S&P/ASX 200 Index dropped 5.9 percent to 3,697.30 at the close of trading, the lowest since Oct. 25, 2004.
China's stocks rose to the highest in three weeks, led by industrial companies, as the government took steps to implement its 4 trillion yuan ($586 billion) economic stimulus plan. The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose 72.26, or 4 percent, to 1,874.08 at the close, the highest since Oct. 21.