US Stocks fell Tuesday after Standard & Poors cut Greece's debt rating to junk and lowered Portugal's debt rating, raising fears that a euro zone debt crisis could slow the global economic recovery.
The Dow Jones industrial average (INDU) tumbled 213 points, or 1.9%, closing below 11,000, a key psychological level. The Dow ended the previous session at its highest point in 19 months.
The slide was the Dow's biggest one-day point drop since July 15, 2009, when it lost 257 points.
The S&P 500 index (SPX) fell 28 points, or 2.3%, closing below 1,200, a psychological level traders look at. The Nasdaq composite (COMP) slid 51 points, or 2%.
Oil prices dropped for a second straight day as traders waited to see whether the Federal Reserve will keep interest rates at record lows that have helped support crude prices.
When the Fed wraps up its two-day meeting on Wednesday, it is all but certain to leave the key bank lending rate between zero and 0.25 per cent, where it's been since December 2008.
Benchmark crude for June delivery fell $US1.76 to settle at $US82.44 a barrel on the New York Mercantile Exchange.
The Australian share market is set for a significantly weaker opening after Wall Street and European markets plunged due to worsening debt problems in Greece and Portugal.
At 0712 AEST on the Sydney Futures Exchange, the June share price index contract was 90 points lower at 4,794 points.
In economic news on Wednesday, the Australian Bureau of Statistics releases the consumer price index for the March quarter.
Reserve Bank of Australia (RBA) assistant governor Guy Debelle is scheduled to deliver a speech at a Mortgage & Finance Association of Australia breakfast seminar.
GOLD up $8.20 to US$1,162.20 an ounce SILVER down 21.8c to US$ 18.119 an ounce COPPER down 16.45c at US$3.3635 a pound
