Global stock markets dropped Wednesday as more signs American consumers were struggling undermined hopes for a stronger turnaround in the world's largest economy.

Major Asian markets fell by about 1.5 per cent or more, with European shares shedding about one per cent in early trade. Oil prices dropped below $79 a barrel, while the dollar weakened against the yen.

The losses followed another choppy session on Wall Street, where an unexpected drop in consumer confidence gave investors few reasons to venture further into a market that's run massively higher in the last eight months.

The news was the latest evidence that U.S. shoppers, their budgets tightened by the economic crisis and rising unemployment, aren't likely to return to their spendthrift ways anytime soon. It was all the more unsettling in Asia, coming ahead of the vital Christmas holiday season, when major export companies rely heavily on Americans to increase their spending on electronics, toys and other goods.

"The figure sparked worries that U.S. consumer spending in the crucial Christmas season will be stagnant. Investors are now bracing for very weak retail sales in the upcoming season," said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd. in Tokyo.

As trading opened in Europe, Britain's FTSE 100 fell 1.1 per cent, Germany's DAX was off 0.8 per cent and France's CAC-40 shed one per cent.

In Japan, the benchmark Nikkei 225 index lost 137.41 points, or 1.4 per cent, to 10,075.055. Hong Kong's main index retreated 408.01, or 1.8 per cent, to 21,761.58.

Elsewhere, South Korea's Kospi dived 2.4 per cent, to 1,609.71, leading the declines in Asia. Australia's market fell 1.4 per cent, Taiwan's market lost 1.6 per cent and India's Sensex benchmark fell 0.6 per cent. China's Shanghai index recouped its losses to close up 0.3 per cent.