The miserable American economy - including the dismal jobs numbers released last Friday -- along with the growing crisis in the euro zone in the banking sector, have world markets in a near panic.
The Tokyo exchange hit a 28 year low as investors scrambled for the security of Japanese government bonds, which were yielding an astonishing 0.80%.
Germany's DAX lost 1.4 percent to 5,963.41 and France's CAC-40 shed 0.3 percent to 2,940.33. Markets in Britain were closed for a public holiday.Wall Street appeared headed for a lower open, with Dow Jones industrial futures shedding 0.6 percent to 12,032 while S&P 500 futures lost 0.5 percent to 1,268.40.
Markets came under siege in Asia earlier in the day. Japan's Nikkei 224 index dropped 1.7 percent to close at 8,295.63, its lowest finish since Nov. 28, 2011. The broader Topix index ended below the 700 mark for the first time since December 1983, Kyodo News Agency said.
Hong Kong's Hang Seng tumbled 2 percent to 18,185.59. South Korea's Kospi shed 2.8 percent to 1,783.13. Benchmarks in Taiwan and Indonesia fell 3 percent and 4.3 percent, respectively.
Mainland Chinese shares also lost ground, with the benchmark Shanghai Composite Index falling 2.7 percent to 2,308.55. The index's drop of 64.89 points was the biggest this year.
"US jobs numbers were not the only weak reading as manufacturing output data in China and the US were also lower, and euro area unemployment reached a record level," Stan Shamu of IG Markets in Melbourne, said in an email.
"There aren't many positives for risk assets at the moment," he said.
Ambrose Evans-Pritchard smells the rot:
Switzerland is threatening capital controls to repel bank flight from Euroland. The Swiss two-year note has fallen to -0.32pc, not that it seems to make any difference.
Denmark's central bank said it was battening down the hatches for a "splintering" of EMU. It has cut interest rates twice in a matter or days and pledged to do whatever it takes to stop euros flooding into the country. Contingency plans are on the lips of officials in every capital in Europe, and beyond.
On a single day, the European Commission said monetary union was in danger of "disintegration" and the European Central Bank said it was "unsustainable" as constructed. Their plaintive cries may have fallen on deaf ears in Berlin, but they were heard all too clearly by investors across the world.
Joschka Fischer, Germany's former vice-Chancellor, said EU leaders have two weeks left to save the project.
"Europe continues to try to quench the fire with gasoline - German-enforced austerity. In a mere three years, the eurozone's financial crisis has become an existential crisis for Europe."
The ECB is not saying the euro zone is "unsustainable" because of German austerity. It is saying that the debt being carried by many european nations is unsustainable in the long run and needs to come down. This notion that european nations can massively increase their budgets to stimulate their economy -- and then cut back when the good times return -- is a fantasy. Angela Merkel is not going to enable the rest of Europe to play off the German taxpayer's forebearance for the euro project any longer. It is costing her what appeared at one time was a fairly easy re-election and now that France has abandoned austerity, would leave her the only sane leader in an increasingly insane Europe.
Merkel will try valiantly to save the monetary union but the momentum is all on the side of break-up at the moment. How that affects America rests on the skinny shoulders of an incompetent, economically ignorant president and a central banker at the Fed who is in love with the printing presses at the US mint.
Such leadership does not engender much confidence in the future.