While you were sleeping: UPDATED Allergan shares sink on anti-merger move

Equities on both sides of the Atlantic slid as concern about the global economy, spurred by reports including a surprise drop in Germany's factory orders, returned to the forefront of investors' minds.

Botox maker Allergan tanked 14.8% amid concern about that Pfizer's $US160 billion planned takeover of the Dublin-based company might be thwarted by new US tax measures.

Pfizer is leaning toward abandoning its agreement to buy Allergan because of the new measures aimed at curbing tax-evading corporate deals, Reuters reported, citing a source familiar with the situation.

"By how the stocks are trading, the market thinks the deal is almost dead," Les Funtleyder, healthcare portfolio manager at E Squared Asset Management in New York, whose firm holds Pfizer shares, told Reuters. Against the trend, Pfizer shares rose 2.1%.

Meanwhile, researchers at the Institute of International Finance, a Washington-based association that represents close to 500 financial institutions from 70 countries, say the chances of a US downturn within two years are at around 30-35% due to the earnings slump, up from 20-25%, Bloomberg reported.

In IIF's April Capital Markets Monitor, executive managing director Hung Tran and his team blamed the global decline in earnings on poor productivity growth, weak demand and a general lack of pricing power.

"In the past, if you had poor performance at home, you could recoup and compensate for that with overseas investment," Mr Tran told Bloomberg. "But if you suffer declines in profits domestically and internationally, you tend to retrench."

Wall Street drops
Wall Street moved lower. The Dow Jones Industrial Average fell 133.68 points, or 0.75%, to close at 17,603.32 while the Nasdaq Composite Index dropped 1% to 4843.93. The Standard & Poor's 500 Index also slid 1% to 2045.17.

Declines in shares of Walt Disney and those of Cisco Systems, down 2.4% and 2.2% respectively, led the Dow lower.

Bucking the trend were shares of Pfizer and those of Boeing, up 2.6% and 1% respectively in early afternoon trading.

US Treasurys advanced, pushing yields five basis points lower to 1.73% from 1.78%. Gold futures continue to rise,  up 0.9% to $US1228.40 an ounce

"We're not an island in the world, and these global concerns have affected us," Aaron Kohli, a fixed-income strategist at BMO Capital Markets in New York, told Bloomberg. "The big question now is the persistence of that turmoil.''

In Europe, the Stoxx 600 Index finished the session with a 1.9% slide from the previous close, led by declines in miners and car makers, including PSA Peugeot Citroen.

The UK's FTSE 100 Index retreated 1.2%,while France's CAC 40 Index dropped 2.2%.

Germany's DAX Index gave up 2.6%, after a report showed a surprise decline in German factory orders in February, boosting concern about Europe's largest economy.

(BusinessDesk)