Stocks on Wall Street fell the most in nearly three months after a triple whammy of US banking restrictions proposals, continuing concerns over Greek debt and worry over China putting the brakes on economic growth.
Commodities fell with sharemarkets, while the US dollar and the euro also remained under pressure.
On Wall Street, the main focus was on financial stocks, which were hit hard after President Obama proposed the most extensive curbs on market speculation by banks since the outbreak of the recent financial crisis.
He spelled out a plan that would effectively restore some provisions of the Depression-era Glass-Steagall Act, which separated firms' commercial and investment activities until it was repealed in 1999.
JP Morgan Chase and Bank of America were two of the session's worst performers. JP Morgan fell 6.6% and Bank of America was down 6.2%. Goldman Sachs fell 4.1%, despite reporting stronger-than-expected earnings before the bell. Citigroup slid 5.5%.
The Dow Jones Industrial Average plummeted 213.27 points, or 2%, to 10389.88. The measure is now down 0.4% for the early going of 2010, the first time it has ended with a year-to-date loss.
The Dow has suffered two straight triple-digit point declines -- something that hasn't happened since late October.
The S&P 500 was off 1.9% to 1116.48, led by a 4.3% slide in its basic-materials sector as fears of global monetary tightening continued to simmer.
The Nasdaq Composite Index was down 1.1% to 2265.70.
European stocks slumped as investors took cautionary steps ahead of President Obama’s banking regulation proposals.
The pan-European Stoxx 600 Index closed down 1.4% at 252.7, the UK's FTSE 100 ended down 1.6% at 5335.1, Germany's DAX lost 1.8% at 5747.0 and France's CAC-40 declined 1.7% at 3862.2.
The negative session resulted in the Europe's main bourses hitting fresh intraday lows for 2010.
Commodities: Oil, gold down
Crude futures sank to near a one-month low on new evidence of slipping US oil demand. The Energy Information Administration reported that demand for crude had slipped 1.8% below last year's recession-addled lows in the four weeks ended January 15.
Light, sweet crude for March delivery settled $US1.66, or 2.1%, lower at $US76.08 a barrel in New York, the lowest settlement since December 22.
February crude expired on Wednesday at $US77.62 a barrel. Brent crude on the ICE futures exchange settled $US1.74, or 2.3%, lower at $US74.58 a barrel.
Gold futures fell in a selloff linked to the broadly-based negative investment sentiment.
February gold futures were down $US15.60, or 1.4%, at $US1097 an ounce in New York.
Currencies: Dollar, euro steady
The US dollar remained under pressure, coming nearly even against the euro compared with day-earlier levels after trading in extremely choppy waters through most of the session.
The greenback had sailed to its highest level against the euro since July in earlier trading before sinking against the common currency after the announcement of the proposed bank regulations.
The euro was at $US1.4090 from $US1.4104 late on Wednesday. The dollar was at ¥90.24 from ¥91.23, while the euro was at ¥127.15 from ¥128.67.
The UK pound was at $US1.6201 from $US1.6286.
Fri, 22 Jan 2010