World markets slide on economic woes
European shares track Asian losses as investors await rate decision from European Central Bank.
(CNN) -- Europe joined Asia and Wall Street in a global selloff on the heels of the latest discouraging economic news.
London, Paris and Frankfurt all slipped at least a percent lower in early trading on Thursday as the European Central Bank was expected to cut a key interest rate in an effort to stimulate the euro zone economy.
The selloff was brutal across Asia. Tokyo's Nikkei average slumped nearly 5%on the day after Japan's Cabinet office reported a record drop in November machinery orders. Separately, Nissan announced a domestic production cut of 64,000 vehicles for February and March in an attempt to bring inventory in line with demand.
In Seoul, South Korea's KOSPI lost 6%; Australia's All Ordinaries index shed 4.1%; and Hong Kong Hang Seng gave up 3.4%.
On Wall Street, stocks slumped Wednesday as a bleak retail sales report and more dour news from the banking sector amplified fears of a prolonged recession.
After the close, Apple (AAPL, Fortune 500) CEO Steve Jobs said he's taking a medical leave through the end of the second quarter because his health-related issues are "more complex" than he thought. Shares tumbled 10% in after-hours trading.
The Dow Jones industrial average lost 250 points, or 2.9%, ending at its lowest point since December 1. The Dow has now tumbled for six sessions in a row.
The Standard & Poor's 500 index lost 3.4% and ended at the lowest point since Dec. 1. The Nasdaq composite lost 3.7% and closed at its lowest point since December 4.
Wednesday's decline extends the 2009 selloff. Stocks have slipped through much of the first two weeks of the year as worse-than-expected economic and corporate news has caused investors to question the year-end rally.
"There's a sense of 'Wow. We knew it was bad, but not this bad,' " said Drew Kanaly, chairman and CEO at Kanaly Trust Company.
He said that no one is surprised by the downturn, but rather the scope and speed of it. "I think it's caught people a little off guard, how fast the economic conditions have started to deteriorate."
In particular, investors were reacting Wednesday to the weakness in the banking sector, said Steven Goldman, market strategist at Weeden & Co.
Deutsche Bank reported a huge quarterly loss, HSBC may need to raise billions in capital and JPMorgan Chase's (JPM, Fortune 500) results loom. Investors are also taking a sour reaction to news that Citigroup (C, Fortune 500) is selling a majority stake in its brokerage unit to Morgan Stanley (MS, Fortune 500), a move that would seem to indicate the beginning of the break-up of the troubled banking firm.
"Citigroup selling their crown jewels in a bad environment is definitely contributing to the selling over the last week," Goldman said.
Between the bear market lows of Nov. 20 and the end of the first session of 2009, the S&P 500 rallied nearly 24%. Since then, the S&P 500 has lost 9.6% and looks to be headed for more declines in the short term.
But the financial sector has fared far worse. Between Nov. 20 and the first session of the year, the KBW Bank index gained over 23%, roughly comparable to the S&P 500. Since then, it has lost almost 21%, far surpassing the broad market's decline. 
