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Stocks plunge as global growth worries rise

Stocks on Wall Street slumped in the second-biggest loss this year as global growth worries knocked investor confidence.

The Dow Jones Industrial Average dropped 250.82 points, or 2%, to 12,573.57, while the S&P 500 index fell 2.2%, to 1325.51.

The Nasdaq Composite shed 2.4%, to 2859.09, snapping a five-session rally.

The Dow edged higher at the open but quickly turned red after Mid-Atlantic manufacturers said business conditions deteriorated sharply this month, according to the US Federal Reserve Bank of Philadelphia.

Aluminium company Alcoa fell 4.1% as the Dow's biggest decliner. Energy blue chips Exxon Mobil and Chevron each fell more than 3.4% as oil prices dropped below US$80 for the first time this year.

Traders also cited lingering disappointment that the Fed held off on announcing more aggressive stimulus measures on Wednesday.

Instead, it opted to extend Operation Twist, a programme where the central bank sells short-term Treasurys and buys longer-dated bonds to help tamp down long-term borrowing costs.

European markets turned lower. The Stoxx Europe 600 fell 0.5% to 248.40, four-day winning streak.

Most Asian stock markets fell on worries about the Chinese economy after the gauge of China's manufacturing activity showed more weakness.

Crude oil futures fell 4% to settle at $US78.20 a barrel, and gold futures shed 3.1% to $US1564.50 an ounce.

The US dollar rose against the euro and the yen.

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