NEW YORK (CNNMoney) -- Asian and European stocks tumbled Monday on fresh worries about the eurozone debt crisis and the dim outlook for global economic growth.
The Hang Seng () in Hong Kong fell 4.4% and Japan's Nikkei ( ) dropped 1.8%. The DAX ( ) in Frankfurt lost 2.3%, London's FTSE 100 ( ) sank 1% and the CAC 40 ( ) in Paris dropped 1.8%.
The selling carried over in U.S. markets, but the losses were more moderate. The Dow Jones industrial average ( ) was down 65 points at midday.
The global retreat from risky assets came after the Greek government released a budget proposal over the weekend that fell short of the deficit targets that the debt-stricken nation needs to meet before qualifying for more bailout money.
Greece has been at the heart of the recent turmoil in global financial markets. The nation is widely expected to run out of money this month, unless it receives another round of emergency funding from fellow euro area nations and the International Monetary Fund.
In its 2012 budget proposal, the Greek cabinet outlined another €6.6 billion in cuts. The Greek Parliament still needs to vote on the budget.
Greece expects to report a deficit of 8.5% of gross domestic product this year. That's higher than the 7.8% target that Greece had agreed to under the terms of last year's €110 billion bailout.
The Greek cabinet attributed the shortfalls to a deeper-than-expected recession. The Greek economy is now expected to contract by 5.5% this year, worse than the 3.8% decline projected in May, according to a statement.
The shortfalls "increase the possibility of a delay to the next tranche of bailout funds," said Gary Jenkins, head of fixed-income at Evolution Securities. "Though until the euro area is better prepared for a Greek default we expect the funds will be paid to avoid the consequences of a disorderly default," he added in a note to clients.
Meanwhile, euro area finance ministers were meeting in Luxemburg to discuss Greece's progress on fiscal reforms.
The European Central Bank is set to meet Thursday. Many investors expect the ECB to announce some form of economic stimulus, with some anticipating an interest rate cut at this week's meeting or next month.
But last week's reading on European inflation could lead the ECB to keep rates steady. The consumer price index rose to 3% in September, much faster than the 2.5% rate in August.
In economic news, a report Monday showed that a key measure of manufacturing activity in the eurozone fell to a 25-month low.
The Markit eurozone purchasing managers index fell to 48.5 in September from 49 in August. It was the second month in a row that manufacturing activity contracted across the 17-nation euro area.
In the United States, the Institute for Supply Management issued a better-than-expected report on manufacturing. The ISM manufacturing index for September came in at 51.6, up 1 point from August. It had been forecast to ease to 50.5. Any measure above 50 indicates growth in the sector.
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