LONDON - Worries about the world-leading U.S. economy and fears over bank credit rippled across financial markets on Monday, sending stocks sharply lower and dragging the dollar to a record low against the euro.
Oil prices eased more than $1, but remained above $87 a barrel.
Finance leaders from the Group of Seven industrialized nations said over the weekend that the world economy was fine but that financial market conditions required close monitoring because of shortcoming exposed by the credit crisis.
This did little to allay market concerns, particularly following disappointing earnings from U.S. economic bellwether Caterpillar Inc on Friday, which also said there was a 50-50 chance of a U.S. recession next year.
MSCI's main world stock index was down 0.7 percent and its normally high-flying emerging market counterpart fell more than 2 percent.
Stephen Dowds, head of international equities at Northern Trust Global Investments, said investors were reacting to sharp losses on Wall Street on Friday but also to the current crop of earnings statements.
"We have had a flurry of disappointments," he said.
European stocks took a hit. The FTSEurofirst 300 index of top European shares was down 1.4 percent.
Earlier, Japan's Nikkei average ended at a four-week closing low, down 375.90 points or 2.2 percent at 16,438.47. The broader TOPIX index fell 1.8 percent to 1,563.07.
DOLLAR RECORD LOW

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