The selling of US stocks accelerated ahead of the closing bell Wednesday, leading the Dow to close below the 13,000 level for the first time since the end of April amid sustained concerns about troubled credit markets. The Dow Jones Industrial Average ended 167.4 points lower at 12,861, its first close below the 13,000 mark since April 24. Of the Dow's 30 stocks, 29 ended in the red.

Shares of Countrywide Financial slumped 13% after the mortgage lender was cut to sell from buy at Merrill Lynch, with the broker citing concerns about liquidity in the mortgage sector. The Dow shifted gears along amid contrarian words from the New York Federal Reserve over its repurchases, with the Fed in the end saying it would take $ 7 billion in a "repo," where it buys securities from dealers, who then put the funds into commercial banks.

Central banks worldwide have supplied billions of funds to banks over the past week to make cash available for lending and keep interest rates stable amid signs that credit was drying up. Still, the Fed has not indicated that it will free up more cash by making an interest rate cut at its Sept. 18 meeting, a move that many on Wall Street believe could stoke a stock recovery. Inflation has been keeping the central bank from lowering rates; the Labor Department said Wednesday its Consumer Price Index rose a mild 0.1% in July, as expected, but energy prices remain high.

At the New York Stock Exchange, volume hit nearly 2 billion shares, while declining issues outpaced advancers 3 to 1. At the Nasdaq, 2 billion shares were traded, with decliners ahead of advancers more than 2 to 1. Broader stock indicators also fell. The S&P 500 index dropped 19.84, or 1.39%, to 1,406.70. The Nasdaq composite index lost 40.29, or 1.61%, to 2,458.83. Bonds rose, moving in the opposite direction as stocks. The yield on the benchmark 10-year Treasury note fell to 4.72% from 4.73% late Tuesday.

Meanwhile, Asian indexes slid early Thursday after another day of losses on Wall Street, with Japanese shares also hurt by exporters such as Toyota Motor Corp. and Sony Corp. following the yen's rally against the U.S. dollar. South Korean stocks dropped sharply on heavy losses in financials such as SK Securities and Kookmin Bank as trading resumed after a national holiday.

In Tokyo, the Nikkei 225 index fell 1.9% to 16,160.88, on top of Wednesday's 2.2% drop. The broader Topix index declined 2.6% to 1,552.25. Japanese banking shares also fell after reporting losses related to the U.S. subprime-mortgage market, with Mitsubishi UFJ Financial Group sliding 4.6% and Mizuho Financial Group falling 6%.

South Korea's Kospi was down 6.75% or 123 points, Taiwan Weighted Index was down 4.05% or 348 points, Shanghai was down 1.5% or 73 points and Singapore's Straits Times was down 4.1% or 134.10 points.