In London, shares fell as mining firms dropped recent gains and other firms revealed disappointing sales figures, putting the FTSE 100 down 184.9 points (2.9%) 6,191.6.
British Land shares lost 8.5p (1.08%) to 796.5p, while Alliance & Leicester shares lost 4.25 points (0.99%) to 434.5p.
BHP Billiton shares dropped 173p (7.88%) to £20.23, while Kazakhmys lost 151p (7.77%) to £17.92 as mining firms dragged the market down.
On Wall Street, markets dropped considerably as a new report on inflation continued to stoke fears about the US economy and the Dow Jones fell 179.04 points (1.37%) to 12,849.12.
Only three Dow Jones shares gained, with Chevron leading the way, up 0.56 (0.55%) to $102.76 as oil prices continued to break records. Merck added 0.19 (0.47%) to $40.21, while Exxon Mobil climbed 0.35 (0.37%) to $94.71.
Home Depot shares took a major hit as the firm revealed profits were down 66%, with shares falling 1.4 (4.85%) to $27.47, while General Motors slipped 0.81 (3.88%) to $20.06.
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Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till