Global stocks pull back
European and Asian markets slump. US markets fall amid financial jitters.
LONDON (CNNMoney.com) -- Stocks in Europe and Asia retreated Tuesday as investors were unable to shake their economic fears.
Europe's main markets were all in negative territory in afternoon trading. The DAX in Germany was down 5.25% and France's CAC-40 was 4.83% lower. Britain's FTSE 100 was down 3.57%.
The declines in Europe followed a slump in Asia, where Japan's benchmark Nikkei index dropped 3%. In Seoul, the KOSPI fell about 2%, while Hong Kong's Hang Seng index shed 4.8%.
Global stock markets had rallied Monday after China unveiled a $586 billion stimulus package that investors hoped would help the world economy stave off a deep recession.
In New York, the Dow Jones industrial average lost about 262 points in mid-day trading (full story).
The price for a barrel of crude oil fell below $60 Tuesday morning. Light, sweet crude for December delivery was down $3.51 at $58.90 a barrel in New York.
The Federal Reserve, using emergency power to act swiftly, granted approval Monday for AmEx (AXP, Fortune 500) and American Express Travel Related Services to become bank holding companies.
The move will give AmEx the ability to grow its deposits - a more stable form of funding - and provide it greater access to Fed funding and government rescue programs.
The federal government also said Monday it was restructuring AIG's bailout plan, buying $40 billion in preferred stock, reducing its original $85 billion bridge loan to $60 billion, and cutting the interest rate by 5.5 percentage points.
The total reworked deal is worth about $152.5 billion. The reworking acknowledges that the initial plan was insufficient to reverse AIG's slide. Additionally, AIG (AIG, Fortune 500) reported a steep quarterly loss of $24.5 billion in the third quarter.
Fannie Mae (FNM, Fortune 500), another company that nearly went under as a result of the subprime mortgage crisis, reported a steep quarterly loss of $29 billion Monday.
A large portion of the loss was due to a change in the way it accounted for tax credits. But even without that, results were far worse than a year ago, due to bad mortgage bets. In September, the government took over Fannie Mae and Freddie Mac.
CNN Wires contributed to this report. 
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