US Markets

U.S. stocks closed sharply lower due to fresh worries of a Greek default, the surprise resignation of a European Central Bank executive board member and concerns about President Barack Obama's jobs plan. The Dow Jones Industrial Average tumbled 303.68 points, or 2.7%, to 10992.13, its fifth drop out of the last six sessions. All 30 Dow components closed in the red.

[Kick off your day with our newsletter]

The blue-chip Dow finished the holiday-shortened week down 2.2%, its sixth weekly decline out of the last seven. Markets were closed Monday in observance of the U.S. Labor Day holiday. The Standard & Poor's 500-stock index shed 31.67 points, or 2.7%, to 1154.23, led lower by energy, material and financial stocks. All 10 of the S&P 500's sectors fell. The technology-heavy Nasdaq Composite dropped 61.15, or 2.4%, to 2467.99.

The increasing possibility of a Greek default sent the Dow tumbling as much as 360 points before it recovered some losses in the final hour of trading. Investors are worried that a default is becoming a more-likely scenario, with the fear of how markets and the global economy would react to such a scenario weighing on investor sentiment.

The euro tumbled to a seven-month low against the dollar. Rumors also circulated about how Germany is planning to recapitalize German banks that would suffer from a Greek default. The steep declines came as finance ministers and central bankers gathered in Marseille, France, for a Group of Seven meeting. Domestic stocks took cues from heavy losses in overseas markets.

European stocks dropped sharply after Juergen Stark, Germany's top representative on the European Central Bank's executive board, elected to step down. Stark's resignation symbolizes the latest disagreement among European officials over how to solve their economic woes and stop the deepening threat of a spreading debt crisis.Stark had opposed the ECB's decision last month to reactivate its government-bond purchase program. In the U.S., McDonald's was one of the worst-performing blue-chip stocks, dropping 4% after its same-store sales results last month disappointed investors. Fellow Dow component Bank of America fell 3.1%. The bank's executives have considered cutting roughly 40,000 jobs during a first wave of restructuring that is expected to be discussed Monday, according to The Wall Street Journal.

European Markets

European stocks closed lower Friday, amid predictions of a worsening global economic outlook and fears the European Central Bank's bond-buying program may be in jeopardy. The Stoxx Europe 600 index lost 2.6% to 224.59. London's FTSE 100 fell 2.4% to 5214.65, Frankfurt's DAX dropped 4% to 5189.93 and Paris's CAC-40 was 3.6% lower at 2974.59. I

nvestors fretted the ECB's bond-buying program could be under threat after the ECB said Executive Board Member Juergen Stark will step down from his post. Stark, who the ECB says is resigning for personal reasons, had opposed the ECB's decision last month to reactivate its government bond-purchase program. Since reactivating the program the ECB has purchased EUR50 billion in government bonds. At the same time, comments from U.S. Treasury Secretary Timothy Geithner in Marseilles, France, that he doesn't see any dramatic policy changes from the upcoming G7 meeting also knocked sentiment, said traders, as it damped the market's hopes of news of more concerted action from the meeting.

Also speaking ahead of the weekend's G7 meeting, International Monetary Fund Managing Director Christine Lagarde said downside risks to global growth have increased and countries need to act now. Meanwhile, the nervousness in equity markets was exacerbated by yet another investment bank cutting its view on equities.

Credit Suisse was the second investment bank this week to do so. It cut its global equities view to benchmark from overweight, citing concerns about global growth, commodity prices, poor European leadership and possible fiscal tightening in the U.S. In terms of sectors, cyclical stocks suffered the brunt of the selling Friday, with banks hit particularly hard as worries about the euro-zone debt crisis continue to take their toll. At the same time, a note by Goldman Sachs, in which the brokerage cut its target prices on several European banks, did little to help.

Goldman also issued a note on U.K. banks, citing Barclays and Royal Bank of Scotland as most at risk from the Independent Commission on Banking's final report, which is due Sept. 12. RBS fell 5.5%, Barclays lost 9.4% and the Stoxx Europe 600 banks index slid 5.2% to 126.63. Among individual stocks, Porsche dropped 13.6% on news of delays to its merger with Volkswagen. The companies said they won't decide on their merger by the end of this year as originally planned because of legal issues in the U.S. and Germany. Meanwhile, Deutsche Boerse was 10.1% lower as Nasdaq OMX Group voiced opposition to its planned merger with NYSE Euronext.

Asian Stocks

Asian stock markets ended mostly lower Friday, with manufacturers and property stocks among the hardest hit, as initial optimism about cooling inflation in China and a fresh U.S. jobs plan evaporated in afternoon trading. Japan's Nikkei Stock Average finished the day down 0.6%, while Hong Kong's Hang Seng Index fell 0.2%, the Shanghai Composite Index dropped 0.1%, India's Sensex fell 1.7% and South Korea's Kospi lost 1.8% ahead of a four-day holiday weekend. Manufacturers were among the worst performers in Tokyo trading, with Fanuc leading the sector lower, as shares plunged 7.6%. Sumitomo Heavy Industries slumped 5%, and Okuma fell 4.9%.

Weighing on sentiment in Tokyo, Japan revised down its April-June gross domestic product Friday, registering a 0.5% contraction during the quarter compared with a 0.3% fall in the preliminary reading. Following the data, Japanese construction-linked firms lost ground, with Japan Steel Works falling 2.1% and Hitachi Construction Machinery losing 1%. Property stocks suffered in the Hong Kong session, with China Resources Land down 1.8% and Agile Property Holdings off 2.1%. South Korean auto makers were also under pressure, with Hyundai Motor down 2% and Kia Motors 1.7% lower.

Friday, Chinese consumer and producer price indexes showed inflation cooling in August, with the CPI 6.2% higher than a year earlier, easing from July's three-year-high inflation rate of 6.5%. Financials gained after the data, suggesting investors saw inflation as tame enough to avoid fresh monetary-policy tightening. In Hong Kong, China Life Insurance jumped 2.8%, Ping An Insurance Group traded up 0.9% and HSBC Holdings PLC added 0.5%.

Commodities

Base metals slid to a deeply negative close on the London Metal Exchange Friday, marking the end of a volatile week of trading that saw flagship copper swing in a range of almost $350 a metric ton. At the close, LME three-month copper was 3.2% lower at $8,821/ton, its lowest close in two and a half weeks. Meanwhile, nickel tumbled to $21,145/ton, down 4.2% on the previous session.

Crude-oil futures fell 2% Friday, hit by fresh fears of economic turmoil in Europe that sent equities tumbling and the dollar higher. Investors fled from the euro due to growing worries of a Greek default and the potential reverberation through the global economy. The resignation of Germany's top representative to the European Central Bank Friday fueled new doubts about the potential for resolving the euro-zone economic crisis. Tumult in the currency market dovetailed Friday with indications that crude oil was under pressure after failing to hold above the $90 a barrel it briefly broke during the week for the first time in a month.

Light, sweet crude oil for October delivery on the New York Mercantile Exchange settled 2%, or $1.81 a barrel, lower at $87.24 a barrel. The contract traded in a range of $85.64 to $87.75. ICE October Brent crude oil settled $1.78 lower at $112.77 a barrel. Gold futures finished slightly higher, as steep losses in stocks and commodities forced investors to take cover in haven assets such as gold. The most actively traded contract, for December delivery, settled $2, or 0.1%, higher at $1,859.50 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded September delivery gold rose $2, or 0.1%, to settle at $1,856.40 a troy ounce.