European policymakers began working on new ways to stop fallout from Greece's near default, focusing on ways to beef up their existing 440-billion-euro rescue fund.

But deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling Euro zone member countries.

Concerns over the potential effect from Greece's possible default, especially on the banking sector, and worries over a US economic slowdown have been weighing on world stocks, fanning safety-seeking flows into top-rated government bonds.

European stocks lost 0.8 percent while emerging stocks hit their weakest since September 2009.

Meanwhile, US crude oil dropped 1.8 percent to US$78.40 a barrel. However, the dollar was steady against a basket of major currencies.

The euro fell as low as 101.90 yen and hit an eight-month low of US$1.3361.