By Patricia Zengerle

Emerging markets in particular took a hammering, forcing governments to take action to protect their economies. In Washington, the White House said President Bush would meet with global leaders to discuss international financial reforms on November 15.

Three weeks away and after the November 4 U.S. presidential election, the summit of the G20, which includes major industrial nations and big emerging economies like China, India and Brazil, is unlikely to do more than kick off a process toward international reforms. Europeans have been pressing for a major financial system revamp.

In Hungary, the central bank hiked interest rates to prop up the battered currency and the government sought help from the International Monetary Fund. Investors, however, sold the forint on concerns over the health of Hungary's banking system and its ability to finance a large external debt.

Argentina's surprise plan to nationalize its private pension system spread gloom to other emerging markets as investors read it as a desperate government move to stave off default. The country's stock market has plunged 27 percent since the government announced the plan on Tuesday.

On Wall Street, stocks skidded to a five-year low, slammed by disappointing results from companies including aircraft giant Boeing and carrier AT&T.

A number of companies announced job cuts, including drugmaker Merck & Co., which said 6,800 employees will lose their jobs and another 400 vacancies will not be filled, and Popular Inc., the parent of Puerto Rico's largest bank, Banco Popular, which said it will cut 600. U.S. asset manager AllianceBernstein said it would make an unprecedented level of job cuts, though it wasn't specific on numbers.

Several firms announced pay cuts, including U.S. title insurance company Fidelity National Financial Inc., which will institute an across-the-board 10 percent pay cut, and China's largest brokerage, CITIC Securities, with a 5 percent to -20 percent pay reduction, according to sources briefed on the plan.

Plummeting commodity prices drove down shares of energy and materials companies.

Oil fell 7.5 percent to below $67, a 16-month low.

'NOT FEELING GOOD ABOUT THE WORLD'

The Standard & Poor's 500 index and Nasdaq Composite Index each closed at their lowest levels since 2003, slumping 6.10 percent and 4.77 percent, respectively. The Dow Jones industrial average sank 5.69 percent.

In signs that things could get worse, the online retailer Amazon.com Inc cut its 2008 revenue and income forecasts, sending its shares down 14 percent in after-hours trade. Pulte Homes, the No. 4 U.S. home builder, had a larger-than-expected quarterly loss.

In a rare welcome sign suggesting central banks have gained the upper hand against the credit crunch, banks trimmed the interest rates at which they lend to each other, with three-month rates hitting their lowest in about a month.

The unprecedented efforts by monetary authorities have unlocked credit for cash-strapped borrowers, but the positive impact could be negated by a worldwide slowdown, and major central banks could be forced to cut rates.

"You have two variables going in opposite directions. You are seeing credit risks heading lower. But people are not feeling good about the world, and the focus is shifting there," said Eric Lascelles, chief economics and rates strategist at TD Securities in Toronto.

The deteriorating global economy and concern about financial market stability sent the dollar to a two-year high.

Belarus' central bank said it had requested credit from the International Monetary Fund, and Ukrainian Prime Minister Yulia Tymoshenko said she expected Kiev to receive substantial IMF financial aid next week.

The IMF was also ready to help Pakistan, which needs funds to avoid a balance of payments crisis, and Iceland, driven close to bankruptcy.

"It's not that the fundamentals for emerging markets have changed. Capital is now moving back from the emerging world to the developed world," said Neil Dougall, chief emerging markets economist at Dresdner Kleinwort.

The overarching fear was recession, which will weigh on the minds of world leaders at the G20 summit to be held in the Washington area, the first of a series. The White House said it would seek input for the summit from whoever wins the U.S. presidential election.

Minutes from the Bank of England's last meeting, at which it joined a round of rate cuts, said Britain's economy had deteriorated substantially. Prime Minister Gordon Brown admitted the global financial crisis was bound to hurt economies across the world, including Britain's.

European shares ended down 5 percent and Japan's Nikkei average ended down 6.8 percent.

In emerging markets, MSCI's sector index was at its lowest since June 2005, and sovereign debt spreads widened beyond 700 basis points over Treasury yields for the first time since early 2003.

(Editing by Leslie Adler)