While you were sleeping: Stocks fall on IMF report

BUSINESSDESK: Equities slumped on both sides of the Atlantic after the International Monetary Fund reduced its forecast for global growth.

The global economy will expand 3.3% this year and 3.6% in 2013, the IMF said in its World Economic Outlook. That's down from July forecasts of 3.5% in 2012 and 3.9% in 2013.

Meanwhile, the latest round of US earnings-kicked off by Alcoa-is expected to clearly reflect the impact on corporate profits. Earnings reports for S&P 500 companies may show the first quarterly drop in three years, with analysts forecasting a 2.3% decline from the year-ago quarter, according to Thomson Reuters data.

Some say expectations are so low that it leaves plenty of room for good news.

"There's so much pessimism over earnings that there's room for upside with any positive surprise," Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, told Bloomberg News.

"Overall, I think traders are too pessimistic. Even with the IMF economic numbers we got, those are still pretty good. The IMF is forecasting global growth next year will be above 3%. That's probably higher than what most people are fearing at the moment," he said.

In afternoon trading in New York, the Dow Jones Industrial Average dropped 0.55%, the Standard & Poor's 500 fell 0.74%, while the Nasdaq Composite Index shed 1.29%. It was five years ago that the S&P 500 reached a record high of 1565.15. Today, it was last at 1445.12.

The IMF's downgrade of expectations for global growth helped demand for US Treasuries-an auction of $US32 billion in three-year notes was met with record demand.

Shares of Intel fell, last down 2.55%, after downgrades from Sanford Bernstein & Co and Robert Baird & Co.

In Europe, the Stoxx 600 Index ended the session with a 0.5% decline from the previous close. Benchmark indexes also fell in Germany, France and the UK, declining 0.8%, 0.7% and 0.5%, respectively.

The euro weakened, too, dropping 0.9% against the Japanese yen, while falling 0.7% against the greenback.

European Union finance ministers met in Luxembourg today, while German Chancellor Angela Merkel and Greek Prime Minister Antonis Samaras met in Athens.

"I want Greece to remain in the euro," Ms Merkel told reporters, according to Bloomberg. "A lot has been done, much remains to be done."

Her visit came as the IMF forecast today that Greece will miss the five-year debt reduction goal that underpins the nation's bailout.