Stock markets across the world tumbled on Tuesday on fresh concerns about the euro zone and slowing Chinese growth. The European Central Bank said the region?s banks will have to write off more loans this year than last. Meanwhile, data showed that Chinese manufacturing expanded at a slower pace in May, putting a question mark over its growth momentum.

Mirroring global cues, the Indian market tanked over two-and-a-half percentage points, with the BSE Sensex down 372.60 points and the NSE Nifty plunged 116 points. ?We are neglecting the fundamentals and following global cues,? said Ajay Parmar, head of institutional equities at Emkay Global Financial Services.

After an across-the-board fall during the day, European stock markets recouped some of their losses towards the close of trading, following positive US data on manufacturing and construction (Page 18). Dow Jones opened positive and was trading up 0.31% at 1200 local time. Earlier in the day, indices in Asia Pacific fell. The MSCI Asia Pacific Index sank 0.8% to 112.54. Hang Seng and Straits Times index dipped more than a percentage point each. In Asia, Indonesia?s Jakarta Composite fell the most at 2.59%.

As per ECB, the region?s banks will have to write off 195 billion eurose by 2011 and their ability to sell bonds may be curtailed as governments finance deficits. With

governments facing ?heavy financing requirements over the coming years? there?s a ?risk of bank bond issuance being crowded out,? the ECB said in its biannual Financial Stability Report.

?The risk that this implies for bank funding costs also raises the possibility of a setback to the recovery in banking sector profitability.?

China?s Purchasing Managers? Index slid to 53.9 in May from 55.7 in April, the Federation of Logistics and Purchasing said. A gauge of manufacturing in the euro region also declined to 55.8 in May from 57.6 the previous month, Markit Economics said.

? There seems to be a worry that China?s strong economic expansion may be held back, and that may affect countries that depend heavily on China?s demand,? said Lim Chang Gue, a fund manager at Samsung Asset Management in Seoul. ?Also, if economic figures in troubled European countries turn out to be clearly deteriorating, that could add anxiety to the markets.?

Public debt has ballooned out of control in Europe as governments increased borrowing to fund bank bailouts and stimulus programmes to lift the economy out of recession. Now, they are trying to plug these budget deficits.

? The consolidation measures can be expected to have some short-term negative impact on growth and employment,? said ECB vice president Lucas Papademos at a press briefing to discuss the biannual report. Still, ?I don?t think we should be too pessimistic about the impact on the economic performance,? he said.

The Euro dipped below $1.2134, half way between its lifetime low of 82.30 US cents and the all-time high of $1.6038. It traded 1.3% lower at $1.2143 as of 9:59 am in London, after falling to as low as $1.2115.

RIL plunges 20% in freak trade

The Sensex plunged by 626.24 points, when shares of RIL tanked 20% due to a faux pas over a ICICI Bank share quotation. Shares of RIL finally settled at Rs 1,011.55, down 3.21% on the Bombay Stock Exchange.

The freak sale happened after a trader offloaded the company?s stock at an unbelievable level of Rs 840.55 against Monday?s close of Rs 1,045.05. He sold about 62,000 shares of RIL at Rs 840.55 per share while the sale order was meant for ICICI Bank, marketmen say. The transaction pulled RIL down to its 52-week low.

Looks like there has been a freak trade, BSE spokesperson Kalyan Bose said.