Mounting evidence that the world economy is slowing down sharply sent global stock markets spiraling down Thursday as investors brushed off the U.S. Federal Reserve's efforts to spur growth and focused instead on the central bank's gloomy outlook.
Oil and other commodities tumbled, too, in the face of several signs that economies are shifting into reverse: the Fed's assessment of the U.S. economy is gloomier than a month ago, while figures from Europe hinted that a recession is looming and a Chinese manufacturing survey suggested a sharp slowdown.
These concerns heap more misery on markets already skittish about Europe's debt crisis. France's CAC-40 led the retreat, diving over 5 percent.
The losses began Wednesday afternoon in the U.S. after the Fed announced a highly anticipated program to trade in $400 billion worth of short-term bonds for the same amount of longer-term bonds. The goal is to ensure low borrowing rates for a long period, thereby helping to stimulate the housing market and other economic activity.
The program - known as Operation Twist - was bigger than expected, but that seemed to work against the Fed: Investors took it as a signal that the central bank was growing more concerned about the economy. In its statement, the Fed noted "significant downside risks to the economic outlook, including strains in global financial markets."