Bleeding on North American stock markets extended to Asia and Europe Wednesday on fears of a U.S. economic slowdown.

In Tokyo, the Nikkei 225 index shed 3.4 per cent to fall to 13,504.51 — its lowest point in more than two years.

Hong Kong's Hang Seng index gave up 5.4 per cent — which was reported to be its biggest one-day fall since the Sept. 11, 2001 attacks against the United States.

In London, the FTSE 100 stock index dropped sharply at the opening, then regained most of its lowest. The market lost more ground toward the end of the day and finished with loss of 1.37 per cent from Tuesday's close.

Frankfurt's Dax index was off 1.25 per cent, while Paris' Cac 40 was down 0.46 per cent.

Markets in North America tumbled Tuesday on a combination of a weak December U.S. retail sales report and a big fourth-quarter loss at Citigroup.

The U.S. government said retail activity south of the border was down 0.4 per cent in December, when economists had been looking for a drop of 0.1 per cent. The weak retail report was another sign that the U.S. economy is in a slowdown, with some economists saying the U.S. is already in recession.

Citigroup, meanwhile, lost $9.83 billion US after it took a big writedown to adjust the value of assets related to the troubled U.S. mortgage sector.

The latest piece of bad news came after the close of stock trading on Tuesday, when Intel Corp., the world's largest maker of computer chips, posted sales figures that were below expectations.