World stock markets tumbled Thursday, with benchmarks in Tokyo and Seoul losing almost seven per cent each, after recession fears sent Wall Street plunging and Japan suffered its biggest drop in exports in seven years.

The slide in Asian and European shares extended a global sell-off that accelerated overnight amid lowered projections for U.S. economic activity next year from the Federal Reserve and worries over the fate of America's Big Three automakers, which are pleading for emergency loans from Washington.

The uncertainty facing companies around the world was evident after U.S. consumer prices fell one per cent last month, the largest amount in the past 61 years. While beneficial to consumers, lower prices hurt corporate profits and raise the threat of deflation.

The rout continued as trading opened in Europe, where Britain's FTSE 100, Germany's DAX and France's CAC-40 all fell more than two per cent early in the session. Oil and other commodities were also down.

"We've gone past the poor sentiment stage," said Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong.

"People are looking for any kind of positive and there are just no positives out there. Everyone seems to be united in the depressed global outlook," he said. "Whether it's commodities or equities, everything seems to be on a downturn."

Tokyo's benchmark Nikkei 225 average slid 570.18 points, or 6.9 per cent, to 7,703.04. Japan said exports in October sank 7.7 per cent, the biggest decline since 2001, causing the country — an export powerhouse — to report a rare trade deficit.

Surging yen

Earlier this week, figures showed Japan had slid into a recession in the third quarter, joining Hong Kong and the 15 nation euro-zone in two straight quarters of economic contraction. With demand shrinking abroad and a surging yen further undercutting company earnings, Japanese exporter shares took a hit.

Isuzu Motors Ltd. fell 17 per cent after the truck maker said it will cut 1,400 contract workers as it scales back production for this fiscal year. Isuzu is the latest automaker to announce production cuts, joining domestic rivals such as Toyota Motor Corp. and Honda Motor Co.

Trade was similarly grim across the Asia.

In South Korea, the main index fell for its eighth straight session, losing 6.7 per cent to 948.69, as the country's currency, the won, fell to its lowest level in more than a decade. Hong Kong's Hang Seng benchmark sank 517.24 points, or four per cent, to 12,298.56.

In Australia, the main stock measure retreated 4.2 per cent as weakening commodity prices dragged down the country's resource giants — BHP Billiton and Rio Tinto were both down nine per cent or more.

Compared to the rest of Asia, mainland China's bourses suffered modest losses, after speculation over a possible deal by Disney to build a long-awaited theme park in Shanghai boosted property shares. The benchmark Shanghai Composite Index fell 1.7 per cent.

Lowest levels since March 2003

In New York Wednesday, the Dow Jones industrial average tumbled 427.47 points, or 5.07 per cent, to 7,997.28, while the S&P 500 slid 6.12 per cent to 806.58. Both closed at their lowest levels since March 2003, and are rapidly approaching the lows of the 2000 to 2002 bear market.

Falling financial stocks helped pull the S&P/TSX composite index to another triple-digit loss in trading on Wednesday afternoon.

The Canadian benchmark index finished down 345.17 points, or 3.9 per cent, at 8,490.56. The TSX has not been this low since September 2004.

Wall Street appeared poised for another bout of selling. Dow futures were down 92 points, or 1.1 per cent, to 7,935, while S&P futures were down 12.6 points, or 1.6 per cent, to 799.9.

Oil prices were at their lowest in nearly two years. Light, sweet crude for December delivery lost 84 cents to $52.78 a barrel in Asian trade. Overnight, the contract retreated 77 cents to settle at $53.62 a barrel on the New York Mercantile Exchange, the lowest since January 2007.