World stock markets fell Wednesday amid mixed corporate earnings and on views that the U.S. Federal Reserve's expected stimulus measures will be more modest and gradual than expected.
A report on orders for U.S. manufactured goods also weighed down sentiment as it suggested demand in the world's largest economy remains subdued.
Investors didn't find any relief either in U.S. new home sales, which rose last month but not by enough to lift the struggling economy.
Britain's FTSE 100 slid 1.1 percent to close at 5,646.02 and France's CAC-40 fell 1 percent to end at 3,815.77. Germany's DAX dipped 0.7 percent to finish at 6,568.00.
Wall Street was lower in morning trading. The Dow fell 114 points, or 1 percent, to 11,055.63 and broader S&P futures shed 9.7, or 0.8 percent, to 1,175.90.
Deutsche Bank AG reported a euro1.2 billion ($1.7 billion) loss for the third quarter, due to a big charge related to its planned takeover of Postbank AG. Underlying earnings were not as bad as expected, however, and shares were up 1.1 percent.
German automaker Volkswagen AG said earnings for the third quarter of 2010 jumped on demand from China and strong sales of its Audi cars. VW shares held steady on the news.
Swedish appliance maker Electrolux AB and Spanish bank BBVA reported lower profits _ their shares were down 4.5 percent and 3 percent, respectively. Finnish paper maker Stora Enso Oyj was more upbeat and its stock rose 0.7 percent.
In the U.S., the reports were equally mixed. Whirlpool Corp., the world's biggest appliance maker, said third-quarter net income dropped 9 percent, dragged down by a subsidiary's antitrust plea agreements.
Procter & Gamble Co., the world's largest consumer products company, said sales increased and although net income fell 7 percent after the sale of its prescription drug business, it was better than markets expected.
Earnings from Visa are due later.
Beyond corporate news, markets were focused on the prospects for monetary stimulus by the Fed.
Traders have bet that the U.S central bank will enact a bond-buying program in early November in a bid to support the world's biggest economy. Buying bonds would drive interest rates and yields even lower, which makes stocks a more attractive investment.
The Wall Street Journal reported Wednesday, without citing sources, that the Fed will likely take a more gradual and flexible approach to economic stimulus by announcing a new program to buy several hundred million dollars worth of US Treasury bonds over the next few months.
That's in contrast to the nearly $2 trillion spent during the financial crisis. It also suggests traders' hopes that the size of the bond purchase will be around $500 billion may be excessive.
The Fed meets next week and details of any stimulus are expected to be announced when the meeting wraps up Nov. 3.
Economic figures from the U.S. failed to cheer investors. Although a report showed durable goods orders rose 3.3 percent last month, the gain was powered by a surge in demand for commercial aircraft. Spending by companies on capital goods excluding aircraft dropped 0.6 percent. The category is viewed as a good proxy for business investment in the economy.
Separately, new U.S. home sales grew 6.6 percent in September but even with the increase, the past five months have been the worst for new home sales on records dating back to 1963.
New home sales have risen 9 percent from the bottom in May but are still down 78 percent from their peak in July 2005. High unemployment, tight credit and uncertainty about home prices have kept people from buying homes.
In Asia, Japan's benchmark Nikkei 225 stock index trimmed gains to close up just 9.65 points, or 0.1 percent, at 9,387.03. Exporters got a modest lift as the yen reversed some of its recent strength against the U.S. dollar.
Investors were reluctant to trade heavily ahead of the release of corporate results from major Japanese companies including Sony Corp. and Honda Motor Co. later this week.
South Korea's Kospi fell 0.5 percent to 1,909.54 after government figures showed the country's economic growth slowed sharply in the third quarter on weaker exports and manufacturing. Asia's fourth-largest economy expanded 0.7 percent in the July-September period after 1.4 percent growth in the previous quarter.
Hong Kong's Hang Seng index tumbled 1.9 percent to 23,164.58 and mainland China's benchmark dropped 1.5 percent to 2,997.05.
Australia's S&P/ASX 200 shed 0.9 percent to 4,648.10. Benchmarks in India, Singapore and Taiwan also fell.
In currencies, the dollar rose to 81.54 yen from 81.49 yen late Tuesday in New York. The euro fell to $1.3791 from $1.3850.
Benchmark crude for November delivery slid $1.49 to $82.17 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 3 cents to settle at $82.55 on Tuesday.
Associated Press researcher Ji Chen in Shanghai contributed.