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Stocks on Wall Street crumbled the most this year on soft readings on global economic growth and continuing concerns about Greece.
At the close (10am NZ time), the Dow Jones Industrial Average was down 204.04 points, or 1.6%, to 12,758.77.
The Dow had gone 45 sessions without a 100-point decline at the close and hadn't shed more than 200 points in a single session since late November.
The S&P 500 index iwas down 1.5% to 1343.37 and the Nasdaq Composite was down 1.4% to 2910.32. It was the third straight losing session for both.
All 10 sectors of the S&P 500 lost ground, with financial and material stocks leading the declines. Alcoa, down 4.0%, Caterpillar, off 3.8%, and Bank of America, down 3.3%, fell the most among blue chips.
Merck declined 2.6% after the company said it expected first-quarter profit to be lower than Wall Street estimates.
Other markets: Europe, Asia fall on slower growth outlook
European stocks registered their largest losses of 2012 as investors continued to fret about the global growth outlook.
A second reading on the eurozone's combined fourth-quarter gross domestic product showed a contraction of 0.3% in the final three months of 2011.
Another soft spot for global growth was Brazil, where fourth-quarter GDP rose less than expected at 1.4% versus expectations for 1.6%.
There was also escalating nervousness ahead of the Greek debt swap and how willingly private creditors would participate in the deal by the March 8 deadline.
The Stoxx Europe 600 index slumped 2.7% to 258.46. This was the biggest percentage fall since November 2011 and in 2012.
The index has rallied 5.7% this year, largely on the European Central Bank's two long-term refinancing operations.
The UK's FTSE 100 closed 1.9% lower at 5765.80, Germany's DAX fell 3.4% to 6633.11 and France's CAC-40 closed down 3.6% at 3362.56.
Asian stock markets fell sharply.
Hong Kong's Hang Seng Index lost 2.2%, the Shanghai Composite Index fell 1.4% and Japan's Nikkei Stock Average ended 0.6% lower.
Korea's Kospi dropped 0.8% and Australia's S&P/ASX 200 index closed with a 1.4% loss.
Commodities: Oil, gold down
Crude-oil futures prices fell nearly 2% on fresh worries over a potential slowdown in global oil demand. The US Energy Information Administration trimmed its growth projections for 2012 and 2013.
Light, sweet crude oil for April delivery in New York fell $US2.02, or 1.9%, to settle at $US104.70 a barrel, the lowest price since February 17. North Sea Brent crude for April settled $US1.82 lower at $US121.98 a barrel.
Gold futures settled below $US1700 for the first time in six weeks.
The most actively traded contract, for April delivery, fell $US31.80, or 1.9%, to settle at $US1672.10 an ounce in New York.
This was the first time the contract settled below $US1700 since January 24.
Currencies: US dollar rises
The US dollar gained ground while the euro extended losses versus major rivals on increased nervousness over the outcome of Greece's private-sector bond swap and worries about global growth prospects.
The euro was at $US1.3113 compared with $US1.3217 late on Monday. The dollar traded at ¥80.75 compared with ¥81.56, while the euro was at ¥105.89 compared with ¥107.77.
The pound bought $1.5712 from $1.5865, while the dollar fetched 0.9189 Swiss franc from 0.9122 franc.