Equities on both sides of the Atlantic slid overnight as concern about the global economy, spurred by reports including a surprise drop in Germany's factory orders, returned to the forefront of investors' minds.
Also, shares of Allergan tanked, last 15.3 percent lower in afternoon trading in New York, amid concern about that Pfizer's US$160 billion planned takeover of the Dublin-based company might be thwarted by new US tax measures.
Pfizer is leaning toward abandoning its agreement to buy Allergan because of the new measures aimed at curbing tax-evading corporate deals, Reuters reported, citing a source familiar with the situation.
"By how the stocks are trading, the market thinks the deal is almost dead," Les Funtleyder, healthcare portfolio manager at E Squared Asset Management in New York, whose firm holds Pfizer shares, told Reuters. Pfizer shares rose in afternoon trading.
Meanwhile, researchers at the Institute of International Finance, a Washington-based association that represents close to 500 financial institutions from 70 countries, say the chances of a US downturn within two years are at around 30 to 35 percent due to the earnings slump, up from 20 to 25 percent, Bloomberg reported.