From Morrison Securities:

U.S. stocks fell in afternoon trading as investor focus shifted from disappointment over the European Central Bank to the closely watched summit on Europe's sovereign-debt crisis. The Dow Jones Industrial Average lost 171 points, or 1.4%, to 12026 in recent action. The Standard & Poor's 500-stock index shed 23 points, or 1.8%, to 1238 and the Nasdaq Composite lost 42 points, or 1.6%, to 2607.

U.S. Stock Markets

The losses sent the blue-chip Dow into negative territory for December even though it has gained for six of the last eight sessions. Sentiment turned negative before the session's open, after ECB President Mario Draghi quashed traders' hopes of more ECB bond buying. In addition, the central bank gave no new plans to bail out debt-laden governments.

As expected, the ECB cut its key lending rate to 1% from 1.25%, but the new efforts stopped well short of committing to buy more government bonds. The ECB news put traders on edge just ahead of the Brussels summit, which kicked off with a working dinner and was set to continue through Friday. The summit has been the focus of traders' hopes for aggressive new plans to fight the sovereign-debt crisis.

Financial stocks posted the steepest losses. J.P. Morgan Chase lost 4.5% and Bank of America shed 4.4% to lead the Dow's decliners. Morgan Stanley and Citigroup were two of the S&P 500's biggest decliners, each sliding more than 7%. McDonald's was the strongest blue-chip stock and one of two Dow advancers, gaining 0.8%.

The fast-food company's global same-store sales jumped a greater-than-expected 7.4% in November. In U.S. economic data, the number of U.S. workers filing new applications for unemployment benefits fell to the lowest level in nine months, which helped limit the session's losses. Wholesale inventories for October rose 1.6% as companies stocked up in anticipation of strong holiday sales.

European Stock Markets

European stocks sank Thursday after the president of the European Central Bank poured cold water on speculation that the institution may ramp up purchases of government bonds. The Stoxx Europe 600 index dropped 1.5% to end at 237.71. Italian stocks posted particularly heavy losses, with the FTSE MIB index down 4.3% to 14,979.07. Banking group Mediobanca slumped 10.4% and aerospace and defense company Finmeccanica SpA dropped 9.4%.

Among other national benchmarks, Germany's DAX 30 index declined 2% to 5,874.44 and France's CAC-40 index fell 2.5% to 3,095.49. The U.K.'s FTSE 100 index dropped 1.1% to 5,483.77, led lower by banks such as Lloyds Banking Group PLC, which fell 7.4%. Supermarket giant Tesco PLC bucked the negative trend, ending up 0.1% after it reported a 7.2% rise in third-quarter group sales. U.K. stocks didn't show much reaction to news that the Bank of England kept interest rates and its bond-buying program unchanged, as expected.

At his news conference in Frankfurt, Mario Draghi said that the EU treaty prohibits the ECB from "monetary financing" and the bank is constrained by its institutional setup. He was responding to a question regarding the ECB's bond-buying program.

Draghi also said he was surprised by the "implicit meaning" given to his remarks last week that "other elements might follow" if European leaders put together a credible "fiscal compact." The ECB on Thursday lowered its main refinancing rate 25 basis points to 1%, as expected.

The bank also announced a number of measures to boost euro-area liquidity. The spotlight now turns to the Brussels summit of EU leaders, which starts Thursday evening and continues Friday. Bank shares posted heavy losses, with Societe Generale SA down 7.2% in Paris and Commerzbank AG down 9.5% in Frankfurt. The European Banking Authority will release data on bank recapitalization needs Thursday evening.

Asia-Pacific Stock Markets
Asian stock markets ended mostly lower Thursday as investors adopted a cautious stance ahead of the European Central Bank and European Union meetings later in the day and Chinese economic data due Friday. Analysts said investors will be closely watching key Chinese economic data due Friday, including November inflation and industrial production figures, for clues to Beijing's policy plans. Japan's Nikkei Stock Average dropped 0.7% to 8664.58, South Korea's Kospi Composite shed 0.4% to 1912.39, Hong Kong's Hang Seng Index fell 0.7% to 19107.81, and China's Shanghai Composite edged down 0.1% to 2329.82. Growth-sensitive stocks, including many exporters, were under pressure around the region.

In Tokyo, Toyota Motor fell 0.9%, Nissan Motor lost 2.1% and Canon shed 0.6%, while in Seoul, LG Electronics slumped 1.3% and LG Display fell 5.1%. Tokyo-listed major machinery exporters lost ground after Japanese core machinery orders for October fell 6.9% from a month earlier, compared with a 0.1% rise tipped in a poll by Dow Jones and Nikkei. Okuma fell 1.8% and Makino Milling Machine shed 0.7%. Li & Fung shed 5% in Hong Kong trade in a knee-jerk reaction after Singapore state investment firm Temasek Holdings said it plans to raise up to 600 million Singapore dollars from the sale of zero coupon bonds exchangeable into the company's shares.

Base metals closed mostly lower on the London Metal Exchange Thursday, disappointed by comments from European Central Bank President Mario Draghi following a rate cut announcement. At the PM kerb close, flagship three-month copper was 1.5% lower on the day at $7,700 a metric ton. Zinc fell the most, closing 2.1% lower at $1,984/ton. Base metals closely tracked movements in the euro Thursday, posting losses along with the single currency late in the session after Draghi quashed hopes of aggressive stimulus by the ECB, saying that the bank is constrained by its institutional set-up to conduct liquidity-boosting quantitative easing. The metals had earlier pushed to session highs after the ECB returned its benchmark refinancing rate to a historic low of 1.00%.

Crude oil futures were weaker Thursday, falling below $100 as worries over the European debt crisis outweighed a larger-than-expected drop in new claims for U.S. jobless benefits. Light, sweet crude oil for January delivery on the New York Mercantile Exchange settled $2.15, or 2.1%, lower at $98.34 a barrel. The contract had traded at a high of $101.73, lifted by the jobless data. Gold slumped as investors sought safety in the U.S. dollar after the European Central Bank's latest efforts to shore up the euro-zone financial system fell short of market hopes. The most actively traded gold contract, for February delivery, fell $31.40, or 1.8%, to settle at $1,713.40 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since Nov. 25. ICE cotton futures fell amid disappointing U.S. export sales, with the March-delivery contract down 0.4% at 91.90c/pound. Raw-sugar futures rebounded as Wednesday's near 5% slide drew some buyers back to the market. March-delivery futures rose 3.3% on ICE at 23.79c/pound.