US stocks tumbled as the number of Americans claiming jobless benefits rose unexpectedly and renewed fears of sovereign debt problems in Europe led investors to dump riskier assets.

The Dow Jones industrial average fell 268.37 points, or 2.61 percent, to 10,002.18. The Standard & Poor's 500 Index lost 34.17 points, or 3.11 percent, at 1,063.11. The Nasdaq Composite Index shed 65.48 points, or 2.99 percent, at 2,125.43.

European shares fell more than 2 percent, on worries about the peripheral economies in the euro zone, and downbeat US economic data.

The FTSEurofirst 300 index of leading European shares was down 2.75 percent at 992.96 points, falling below 1,000 for the first time since Dec 10.

Japan's Nikkei average lost 0.5 percent, with Toyota Motor Corp sliding further on its recall woes and Sharp Corp tumbling after reporting a smaller-than-expected quarterly profit.

The benchmark Nikkei pared its losses to close down 48.35 points at 10,355.98 after earlier falling as much as 1.2 percent, while the broader Topix lost 0.5 percent to 911.09, also off earlier lows.