Almost a 3 percent drop was noted in Dow Jones and Nasdaq indexes while London’s FTSE 100 index sank about 2.5% .Similarly, French and German markets each lost around 3%.

The results came forward when US data suggested mounting unemployment claims and sluggish shop sales.

The European Central Bank has shown 1.5% growth forecast in 2009, but now it cuts to 1.2%.

In the US, the jitters prompted after an ADP Employer Service report that showed 33,000 jobs cut during August. Weak sales during closely-watched back-to-school period also became the cause of anxiety in economic activities.

Jack Ablin, who is chief investment officer at Harris Private Bank, Chicago, says that the fear of an economic downturn is creating problem for all of us today.

The US monthly employment report is being published on Friday and many analysts expecting that the there are chances of an additional 70,000 jobs lost in August that would take the annual total more 500,000.

The worst fall since late June was noted in The DOW that fell 3% (344.65 points) to 11,188.23 points. Similarly, 3.2% (74.69 points) decrease was found in Nasdaq composite index.

While in London, the economic gloom deepened when the FTSE 100’s fell 4.6% in the past two sessions and closed down 137.6 points at 5362.1.

In Germany, Dax-30 index dropped 2.9% to 6,279.57 points and 3.2% lost was noted in France’s Cac-40 index.