Could Europe's debt crisis be spreading beyond its weakest economies and infecting stronger countries, such as France, Belgium, Austria and the Netherlands?
The spread of French, Belgian and Austrian 10-year bonds over German Bunds hit euro-era highs on Tuesday, while the equivalent Dutch spread hit its highest since early 2009. Italian 10-year yields also rose back above the 7 per cent level perceived to be economically unsustainable, while Spain's Treasury paid levels not seen since 1997 to sell short-term debt.
Stocks fell across the world in response. Britain's FTSE 100 lost 1.3 per cent, France's CAC 40 fell 2.2 per cent and Germany's DAX slid 2.4 per cent. Japan's Nikkei lost 0.7 per cent, while Hong Kong's Hang Seng fell 0.8 per cent.
Dow stock futures lost 131 points, or 1.1 per cent, about two and a half hours before Wall Street opened for business. S&P 500 futures were down 16.70 points, or 1.3 per cent.
Particularly worrying in recent trading sessions has been a rise in French bond yields, to a record 184.5 basis points above comparable German Bunds.
Also adding to nervousness were figures released by the ZEW economic think tank that showed German analyst and investor sentiment slumped in November, their ninth monthly decline in a row.
The euro fell 0.7 per cent to $1.3524 (U.S.), edging closer to last week's one-month low of $1.3484.
In Italy, Prime Minister-designate Mario Monti met party leaders in an urgent bid to form a new government capable of forcing through austerity cuts. He is expected to give a news conference later in the day.
Three-month copper on the London Metal Exchange edged down 1.19 per cent to $7,665.50 a tonne. The metal is down around 8 per cent so far this month.
Benchmark crude for December delivery was up 7 cents at $98.21 a barrel in electronic trading on the New York Mercantile Exchange.
U.S. gold fell 0.7 per cent to $1,766.40 an ounce.
The Canadian dollar slipped to 97.68 U.S. cents.
In corporate news, Staples Inc, the largest U.S. office supply retailer, reported lower-than-expected quarterly sales, hurt by weak demand in Europe, and cut its profit forecast for the year.
Home Depot Inc. reported stronger-than-expected quarterly results and raised its fiscal-year outlook for the third time in six months as the world's largest home improvement chain gained market share from smaller rival Lowe's Cos Inc.