The drop in global stock markets accelerated Tuesday after surprisingly weak U.S. housing figures reinforced fears that the world’s largest economy may be heading back to recession, barely a year after emerging from its deepest downturn since World War II.

As worries over the U.S. economic slowdown swelled, the Dow Jones industrial average briefly dropped below 10,000 for the first time since early July, while the yen surged to a 15-year high against the dollar and a nine-year best against the euro.

An hour into trading, the Dow was 153.41 points, or 1.5 percent, lower at 10,021 while the broader Standard & Poor’s 500 index was 17.72 points, or 1.7 percent, lower at 1,049.64.

In Europe, the FTSE 100 index of leading British shares was down 90.77 points, or 1.7 percent, at 5,144.07 while Germany’s DAX fell 126.86 points, or 2.1 percent, to 5,884.05. The CAC-40 in France was 66.60 points, or 1.9 percent, lower at 3,486.63.

The selling in Europe and on Wall Street was given further impetus by the news that sales of previously occupied U.S. homes fell to their lowest level in 15 years in July. The National Association of Realtors said sales dropped 27 percent to a seasonally adjusted annual rate of 3.83 million. June’s sales, already quite weak, were revised down to 5.26 million.

The U.S. housing market was the original catalyst behind the financial crisis and the global recession and its failure to stabilize is stoking renewed fears about the sustainability of the U.S. recovery and reigniting talk that the Federal Reserve will have to pump more money into the economy to stave off a double-dip recession and deflation.

“It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery,” said Paul Dales, U.S. economist at Capital Economics. “With the increasingly inevitable double-dip in prices yet to come, things could yet get a lot worse.”

The U.S. housing data were not the only piece of bad news Tuesday.

A 0.1 percent monthly decline in Canadian retail sales in June, following a 0.4 percent drop in May, had weighed on sentiment as Wall Street opened. The fear is that a sharper slowdown in the U.S. is infecting economic activity in Canada.

The retreat in Europe and the U.S. came after many of Asia’s markets closed lower. Japan’s Nikkei index led the declines, closing down 121.55 points, or 1.3 percent, at 8,995.14 – slipping under the 9,000 level for the first time since May 2009.

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