Major Asian markets fell by about 1.5 percent or more, with European shares shedding about 1 percent in early trade. Oil prices dropped below $79 a barrel, while the dollar weakened against the yen.
The losses followed another choppy session on Wall Street, where an unexpected drop in consumer confidence gave investors few reasons to venture further into a market that's run massively higher in the last eight months.
The news was the latest evidence that U.S. shoppers, their budgets tightened by the economic crisis and rising unemployment, aren't likely to return to their spendthrift ways anytime soon. It was all the more unsettling in Asia, coming ahead of the vital Christmas holiday season, when major export companies rely heavily on Americans to increase their spending on electronics, toys and other goods.
"The figure sparked worries that U.S. consumer spending in the crucial Christmas season will be stagnant. Investors are now bracing for very weak retail sales in the upcoming season," said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd. in Tokyo.
As trading opened in Europe, Britain's FTSE 100 fell 1.1 percent, Germany's DAX was off 0.8 percent and France's CAC-40 shed 1 percent.
In Japan, the benchmark Nikkei 225 index lost 137.41 points, or 1.4 percent, to 10,075.055. Hong Kong's main index retreated 408.01, or 1.8 percent, to 21,761.58.
Elsewhere, South Korea's Kospi dived 2.4 percent, to 1,609.71, leading the declines in Asia. Australia's market fell 1.4 percent, Taiwan's market lost 1.6 percent and India's Sensex benchmark fell 0.6 percent.
China's Shanghai index recouped its losses to close up 0.3 percent,
Among stocks, the Hong Kong shares of U.S. casino giant Wynn Resorts Ltd. plummeted more than 7 percent after the company said net income fell in the last quarter amid a weak market in Las Vegas.
In the U.S. overnight, stocks ended a volatile session mostly lower as worries about U.S. consumers overshadowed evidence that home prices were starting to recover.
The Dow rose 14.21, or 0.1 percent, to 9,882.17. The broader Standard & Poor's 500 index fell 3.54, or 0.3 percent, to 1,063.41, while Nasdaq fell 25.76, or 1.2 percent, to 2,116.09.
U.S. futures pointed to more losses on Wall Street. Dow futures were down 12, or 0.1 percent, at 9,823.
The mixed signals about the scale of recovery in the U.S. economy weighed on oil prices, with benchmark crude for December delivery lower by 66 cents at $78.90 a barrel in Asian trade. The contract rose 87 cents to settle at $79.55 on Tuesday.
In currencies, the dollar fell to 91.28 yen from 91.79 yen. The euro fell to $1.4789 from $1.4809.
Associated Press Writer Shino Yuasa in Tokyo contributed to this report.
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