Biggest fall in Wall Street in three years

The Dow Jones index closed down more than 500 points, or 4.3%, and came after the leading European bourses fell more than 3%. 

It was the worst day for the Dow since 22 October 2008. Earlier, European Commission President Jose Manuel Barroso warned that the sovereign debt crisis was spreading. In New York, the S&P 500 index fell almost 5% and the tech-rich Nasdaq was more than 5% lower. Frankfurt's Dax and London's FTSE 100 indexes had their worst day this year, closing almost 3.5% lower as investors fretted that Italy and Spain might become engulfed in the debt crisis.

Japan moved on Thursday to expand an asset-purchase fund to help boost its ailing economy. The European Central Bank made an intervention of its own, resuming government bond purchases and offering banks more cash to stem an escalating financial crisi