Stocks slid across the world as Britain, France and Japan signalled their economies will slow sharply and the head of the European Commission said the bloc faced a "systemic crisis."
Britain's FTSE 100 fell 0.8 per cent, France's CAC 40 0.2 per cent, and Germany's DAX 1 per cent. Japan's Nikkei lost 0.9 per cent, while Hong Kong's Hang Seng slipped 2 per cent.
Dow stock futures were down 82 points, or 0.7 per cent, at 11,956. S&P 500 futures lost 12 points, or 1 per cent, falling to 1,242.10.
The euro fell as far as $1.3437 (U.S.), its lowest level in more than a month, after the French bond yield spread over benchmark German Bunds hit a euro-era high. Yields on French 10-year bonds are at 3.56 per cent, having traded around 2.5 per cent only two months ago.
Finance Minister Francois Baroin said on Wednesday that France, one of Europe's stronger economies, was headed for a slowdown, not a recession, and that the government was doing everything to preserve its AAA credit rating, though he ruled out further austerity measures.
Britain is on the brink of a contraction as the euro crisis weighs heavily, the Bank of England said.
Japan's central bank lowered its assessment of its economy and kept its key interest rate at virtually zero to weather the global slowdown, a strong yen and recent flooding in Thailand.
The euro zone faces a systemic crisis that will need a stronger commitment from all countries to resolve, European Commission President Jose Manuel Barroso said. He said there needed to be deeper economic integration among the 17 countries in the euro zone, without putting the remaining 10 members of the European Union at a disadvantage.
Spain appears ready to change its leadership in elections this weekend, which would make Prime Minister Jose Luis Rodriguez Zapatero's administration the third European government to fall within the past two weeks. Polls point to a crushing win on Sunday for the centre-right Popular Party led by Mariano Rajoy.
The European Central Bank was believed to have bought Spanish and Italian bonds on Wednesday, pushing Italy's borrowing costs back below the 7 per cent level viewed as unsustainable. Still, investors are uncertain about the bank's long-term willingness to act forcefully, since it has so far bought bonds occasionally, only to stem sharp sell-offs.
Three month copper futures on the London Metal Exchange fell by 0.8 per cent to $7,622 a tonne.
U.S. crude oil fell 22 cents to $99.15 a barrel.
Gold lost $4, trading around $1,778.20 an ounce.
The Canadian dollar fell to 97.63 U.S. cents.