Stocks in the United States fell on Wednesday, as persistent concerns about the credit crisis hurt bank shares and oil prices rebounded.
JPMorgan Chase and Swiss rival UBS have both reported more losses due to their exposure to the crumbling mortgage market in the United States.
JPMorgan Chase says losses from mortgage-linked assets amount to $US1.5 billion so far this quarter.
Financial stocks fell for a second day. So did retailers after US retail sales edged down in July on a big drop at auto dealers.
US crude oil futures jumped $US3.44 to $US116.45 a barrel after weekly government data showed an unexpectedly large decline in crude oil stocks.
The Dow Jones industrial average fell 109.51 points, or 0.94%, to 11,532.96.
Standard & Poor's 500 Index slipped 3.76 points, or 0.29%, to 1,285.83. The Nasdaq Composite Index was down 1.99 points, or 0.08%, at 2,428.62.
Trading volume was low on the New York Stock Exchange, with about 1.21 billion shares changing hands. About 2.05 billion shares were traded on the Nasdaq.
European shares also dropped on Wednesday. The FTSEurofirst 300 index of top European shares closed down 2.4% at 1,179.64 points.
Banks were the worst performing sector: Royal Bank of Scotland fell 6.4%, while UBS, BNP Paribas and Societe Generale fell between 4.9% - 7.3%.
Around Europe: Frankfurt's DAX fell 2.5% and Paris' CAC 40 lost 2.6%.
In Britain, the FTSE 100 ended down 85.9 points, 1.55%, at 5,448.6.
NZ & Australia
The NZX 50 index closed down eight points to 3345 on Wednesday on turnover of $111 million.
Fletcher Building finished the day up 15 cents to $6.58 after a 4% fall in annual profit. Telecom was up 5c to $3.38 and Contact Energy was down 10c to $8.45
Goodman Fielder was down 3c to $1.84 after saying it would take a one-off writedown of $A170 million on its Fresh Dairy division in New Zealand because of deteriorating economic conditions and high dairy product prices.
Kiwi Income Property Trust was down 2c to $1.12 after saying it might have to write down the value some of its property assets.
In the currency markets: at 8.25am on Thursday, the New Zealand dollar was trading at US70.31 cents, 80.28 Australian cents, 37.60 pence, 76.95 yen and 0.4709 euro. The Trade Weighted Index was at 65.14.
The Australian sharemarket closed sharply lower on Wednesdayy, losing 2% as weaker financial and resource stocks added to the negative direction from Wall Street overnight.
The S&P/ASX200 was down 102 points, or 2.02%, to 4951.6, while the All Ordinaries lost 94.4 points, or 1.85%, to 4995.9.