European markets fell Friday on concerns about banks and pharmaceutical companies, whose profits investors believe may be curbed by President Obama's plan to reform America's costly health care system.
By afternoon in mainland Europe, Britain's FTSE 100 plunged 2 percent to 3,834.89, Germany's DAX lost 2 percent to 3,863.96, and France's CAC 40 dropped 1.5 percent to 2,702.89.
Obama's first budget, announced Thursday, aims to foster generic competition for costly biotech drugs, cutting costs for government programs, employers and patients.
Shares in Astrazeneca fell 6.5 percent, Sanofi-Aventis lost 4.4 percent and GlaxoSmithKline slid 3.2 percent.
"People are realizing that health care is not the great defense in a downturn that it's claimed to be," said Stephen Pope, chief global markets strategist for Cantor Fitzgerald. "With the Obama plan, it's a scheme where Medicare will no longer ask the providers 'what does that cost and yes we'll take it,' they will turn around and say 'this is what we're prepared to pay.'"
Bank stocks also plummeted, led by Lloyds Banking Group, which fell 20 percent. It reported that profits shrank to 819 million pounds in its Lloyds TSB unit in 2008, while the recently acquired Halifax/Bank of Scotland lost 7.5 billion pounds ($10.6 billion) over the year.
The expanded group said it was still negotiating with the British government on terms for insuring questionable assets — a program that enables struggling banks to access government insurance against future losses on toxic assets. Royal Bank of Scotland said Thursday it would dump 325 billion pounds of toxic assets into the program, which the British government hopes will boost lending by reducing banks' uncertainty about the value of past investments.
"People are now looking across to other banks, in Germany, Switzerland and Italy, and there's a sense of will they have to go down a similar route and what cost are they going to have to bear for this fund creation and 'bad bank' creation," said Pope.
European bank stocks as a collective are down 25 percent since the beginning of the year, according to Pope. But the worst sector is autoparts, down 41 percent, which is "really beholden" to the auto-manufacturers sector, itself down 22 percent.
In Asia, stock markets were mixed. Trade was listless after a bruising, volatile month that saw the region's export-driven economies sank deeper into recession amid collapsing demand and their currencies wither.
Sentiment was buoyed somewhat by reports slumping banking giant Citigroup, which has already taken billions in government aid, was nearing a deal to give the U.S. a stake as large as 40 percent.
But most investors appeared to be holding back as the onslaught of negative news about the global economy showed no signs of letting up.
Figures revealed that Japan's industrial production plunged a record 10 percent in January from December. Household spending and retail sales also fell. India's economic growth sputtered to a worse-than-expected 5.3 percent in the last quarter from the previous year.
Until there was evidence that sweeping government measures to jump-start the global economy were starting to take effect, equities markets were likely to remain lackluster, traders said.
"Confidence remains really beaten up," said Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong. "Internationally the picture is very negative. A lot of people are very happy to be sitting on the sidelines."
The Nikkei 225 stock average rose 110.49 points, or 1.5 percent, to 7,568.42 — but finished the month down nearly 4 percent to extend this year's losses to almost 15 percent.
Sony Corp. said its president was stepping down — adding to the string of Japanese companies hoping to fight the global slowdown with renewed leadership. The stock rose 2 percent.
In Hong Kong, the Hang Seng pulled back 0.7 percent to 12,880.89 in a back-and-forth session. South Korea's Kospi rose 0.8 percent to 1,063.03.
Elsewhere, China's Shanghai benchmark dropped 1.8 percent and India's slumping economic growth figures sent the country's main index down 0.7 percent. Singapore sank, Taiwan gained.
In the U.S., major stock indexes gave up early leads to close lower, with health care stocks bearing the brunt of the selling. The Dow Jones industrial average fell 88.81, or 1.2 percent, to 7,182.08. The Standard & Poor's 500 index fell 12.07, or 1.6 percent.
U.S. stock index futures fell slightly. Dow futures were down 6 points at 7,172, while Standard & Poor's futures were down 0.1 point at 752.1.
Oil prices weakened in European trade after an overnight rally. Light, sweet crude for April delivery down $1.17 at $44.05 a barrel. On Thursday, the contract jumped $2.72, or 6.4 percent, to settle at $45.22 on the New York Mercantile Exchange.
