Concern that the eurozone's debt crisis could infect Italy and Spain sent global stocks spiraling downward Monday while markets were still reeling from last week's dismal jobs report in the U.S.
Shares in Europe and the U.S. tumbled Friday after Washington announced that the American economy created just 18,000 jobs in June _ a fraction of the figure expected. Asian markets followed the trend when they opened Monday.
The downbeat sentiment was worsened by indications that Europe's debt crisis might be spreading beyond the three countries that have already received rescue packages. There have been mounting concerns that after Greece, Ireland and Portugal, much-larger Spain could need a bailout to manage its tremendous debt load.
Now it seems Italy, the eurozone's third-largest economy, could also be affected. On Monday, the Milan Stock Exchange plunged 3.5 percent _ the second session in a row it has done that _ and the spread between the country's 10-year bond yield and the German benchmark hit a record high. Spain's IBEX 35 index tumbled 2.8 percent.
As the market tensions grew, eurozone officials were meeting Monday to figure out how to get banks to participate in the next rescue of Greece. Those negotiations have been plagued by threats from ratings agencies that they would consider a bank rollover of Greek debt a default.
"It's fair to say that sentiment was shot to pieces by the much-worse-than-expected non-farm payrolls data on Friday, and with concern that the European debt crisis could spread to Italy there's no real incentive to treat this weakness as a time for bargain hunting," said Yusuf Heusen, a sales trader with IG Index.
Those worries are also weighing on the euro, which fell 1 percent to $1.4068. Some have said Europe's debt crisis calls into question the future of the common currency, but the slide also reflects investors' preference to park their money in the dollar, which is considered relatively safe in times of uncertainty.
"The euro is likely to remain under downward pressure in the European trading session as the ongoing eurozone debt crisis continues to intensify," said Lee Hardman, a currency economist for Bank of Tokyo-Mitsubishi UFJ.
On Monday morning in Europe, France's CAC-40 fell 2.3 percent to 3,823, while Germany's DAX lost 1.9 percent to 7,265. The FTSE index of leading British shares was down 0.8 percent to 5,941.
Shares on Wall Street were also getting hammered. The Dow Jones industrial average fell 0.8 percent to 12,552, while the S&P 500 index was 1 percent lower at 1,330.
One of the biggest losers has been British Sky Broadcasting, which has shed nearly 2.7 billion pounds ($4.3 billion) in market value since the British government called into question a takeover of the satellite broadcaster by News Corp.
Rupert Murdoch's News Corp. is under scrutiny after revelations that one of its tabloids hacked into the phones of crime and terrorism victims. It shuttered the paper, the News of the World, on Sunday.
Shares in both BSkyB and News Corp. were down more than 6 percent on Monday.
Earlier in Asia, Japan's Nikkei 225 stock average lost 0.7 percent to 10,069.53 and Hong Kong's Hang Seng retreated 1.7 percent to 22,347.23. South Korea's Kospi fell 1.1 percent to 2,157.16.
Also dragging sentiment was data released Saturday showing China's inflation accelerated to a three-year high in June even as the overheated economy began to cool. The Shanghai Composite index edged up 0.2 percent to 2,802.69.
The news that the global economy is still struggling pushed oil prices down Monday.
Benchmark oil for August delivery was down more than 1 percent to $95.10 a barrel in electronic trading on the New York Mercantile Exchange.