Stocks on Wall Street fell sharply in a late selloff on worries of lower consumer spending and disappointing retail profits.
Financial stocks also struggled amid reports that regulators are widening their probe into major banks' mortgage deals.
However, new data showed a slight weekly decline in US jobless claims, though filings still remain high on a long-term basis.
The Dow Jones Industrial Average closed 113.96 points, or 1.0%, lower at 10,782.85, led by a 4.2% slide in Cisco Systems as investors responded to its earnings report.
Cisco posted a 63% jump in profit for its fiscal third quarter, but its sales forecast was just in line with analysts' expectations.
The Nasdaq Composite Index was down 1.3% to 2394.36, snapping a three-day winning streak. The S&P 500-stock index slipped 1.2% to 1157.44. The consumer-discretionary category was off 1% on weak quarterly reports from major retail chains.
Other markets: Asia, Europe up
A wave of optimism about the euro-zone debt crisis pushed Asian stocks markedly higher, only to fade later in the day, leaving the main European indexes with smaller gains.
Positive news on corporate earnings encouraged buying in both regions.
The pan-European Stoxx 600 Index closed up 0.2% at 257.24, its third gain in the last four sessions.
Banking shares proved a drag on the markets as worries persisted about governments' debt levels.
In Paris, where Crédit Agricole led the sector's decline, falling 3.6% after the company's first-quarter net profit fell short of expectations, the CAC-40 Index firmed 0.1% to 3731.54. Société Générale lost 1.6%.
Germany's DAX added 1.1% to 6251.97. Deutsche Bank shed 1.5%. SAP lost 1.1% after it said it has agreed to buy California-based Sybase for roughly $5.8 billion.
In London, the FTSE 100 Index rose 0.9% to 5433.73. Shares in BT Group rose 11% after it swung to a net profit in the fiscal fourth quarter from a year earlier, while 3i Group added 7.6% after its full-year results exceeded expectations.
Solid earnings reports boosted Japanese stocks. Hong Kong and Chinese shares gained as investors snapped up banks after recent losses.
In Tokyo, the Nikkei Stock Average rallied 2.2% to 10620.55. NEC added 1.4% after it swung back to a net profit in the year ended March 2010 from a loss in the previous year.
The Shanghai Composite, jumped 2.1% to 2710.51, while Hong Kong's Hang Seng Index advanced 1% to 20422.46.
Australia's S&P/ASX 200 climbed 1.8% to 4652.78, after data showed that 33,700 jobs were created in April, compared with expectations for 20,000 jobs.
South Korea's Kospi rose 1.9% to 1694.58 and Taiwan's Taiex gained 2.2% to 7770.57.
While investors in Europe continued to welcome the bailout plan, concern mounted about the likelihood that efforts to reduce national budget deficits will cut into economic growth.
Commodities: Oil, gold down
Oil futures tumbled to a three-month low in volatile trading amid persistent concerns over swelling inventories at a key US storage hub.
With prices still range-bound, traders are focusing on the difference between the benchmark futures contract, for June delivery of light, sweet crude oil, and the July contract.
June crude settled 1.7% lower at $US74.40 a barrel in New York while the July contract was down 1.5% at $US78.99 a barrel.
Gold futures eased from all-time highs but the losses were relatively small compared with the sharp safe-haven gains of late.
The most actively traded gold contract, for June delivery, fell $US13.90, or 1.1%, to settle at $US1229.20 an ounce in New York.
Currencies: Dollar up, euro down
The US dollar advanced against the euro and the UK pound as investors worried about the economic effects of measures aimed at bringing swelling fiscal deficits under control.
The euro slipped close to a 14-month low versus the dollar as worries surfaced once more about the drag that plans to slash government spending will place on economies of euro-zone countries such as Greece, Spain and Portugal.
In New York, the euro was at $US1.2532, down from $US1.2628 late on Wednesday. The dollar was at ¥92.76, down from ¥93.19, and the euro was at ¥116.24 from ¥117.68.
The UK pound was at $US1.4612, down from $US1.4826.
Fri, 14 May 2010