Stocks suffered one of their worst sessions in weeks on Tuesday following another batch of weak U.S. corporate earnings and uncertainty over the outcome of the race for the White House, AP reported.
So far, quarterly earnings coming out of the U.S. have been mixed, particularly from the technology sector. Downbeat updates on Tuesday from chemical company DuPont and manufacturer 3M added to the prevailing uncertainty.
Facebook unveils its quarterly earnings after the markets close in a statement that could be crucial for the social network's future. The company has had a dire time since its stock flotation in May, losing more than a third of its value as investors became concerned about the company's ability to raise money from advertising.
By mid-afternoon in Europe, Germany's DAX was down 2 percent at 7,185 while the CAC-40 in France fell 2.1 percent to 3,412. The FTSE 100 index of leading British shares was down 1.3 percent at 5,806.
In the U.S., the main indexes were close to seven week lows with the Dow Jones industrial average 1.8 percent lower at 13,106 while the broader S&P 500 index was off 1.7 percent to 1,409.
In recent weeks, markets have been largely buoyant amid signs that Europe was getting a grip on its debt crisis. Hopes that Spain will soon tap a new bond-buying facility from the European Central Bank have helped calm jitters over the eurozone's fourth largest economy but so far the Spanish government has made no request.
With its economy in a deep recession - figures from the Spanish central bank showed the country's economy shrinking by a further quarterly rate of 0.4 percent in the third quarter - investors are getting fidgety again. The yield on the country's 10-year bonds, a gauge of investor unease, has risen for the second day running, up a further 0.10 percentage point to 5.58 percent.
The euro has also taken a pounding, falling 0.8 percent at $1.2968, its first move below $1.30 since Oct. 15.