International financial markets tumbled as a darkening global economic outlook and deepening fissures in Europe over its debt crisis fueled fears the world economy could slip into a period of prolonged malaise.
The Stoxx Europe 600 index fell 4.1% Monday, with banks hard hit. The euro slid below $1.42, its lowest in a month. The declines followed a slide in Asia, where stock indexes in China and Japan dropped by about 2% Monday. On Tuesday morning Asian markets again moved lower, with Japan shares falling 1.2% by late morning. During early Asian trading the 10-year U.S. Treasury yields hit as low as 1.911%, the lowest level in at least five decades, according to traders.
U.S. markets, which were hit on Friday by a dismal job market report, were closed for Labor Day.
Monday's rout is a sign investors increasingly worry that a mix of slow economic growth and high public debt will tip the global economy back into a recession.
"There is clearly a recognition that the debt crisis started in Europe, but the story is similar across the Western world," said Silvio Peruzzo, economist at Royal Bank of Scotland.
Though both the U.S. and Europe emerged from recession about two years ago, a recent string of economic data suggests the recovery is fading on both sides of the Atlantic. A report Friday that the U.S. posted no job growth in August was a watershed, Mr. Peruzzo said, "a turning point" showing that economic risks are turning negative. [...]
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