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TOKYO, Oct. 22 -- Global stocks fell sharply on Wednesday as fears of a worldwide recession elbowed its way into Asian and European markets.

With signs that the worst of the credit crisis is easing, weak corporate earnings, rising inventories and falling demand are now in focus from Wall Street to Tokyo.

Stocks in Japan declined nearly 7 percent, while an index of equity shares across Asia fell more than 5 percent -- at one point hitting a four-year low.

South Korean shares hit a three-year low and the country's troubled currency, the won, fell again against the dollar. A $130 billion plan by the Seoul government to strengthen the won, stabilize stocks and restore bank liquidity was announced last weekend, but it has failed, so far, to overcome concern that a global recession will drag down South Korea's export-dependent economy.

European indexes opened lower and headed down further through the day. By early afternoon, major exchanges in the U.K., France and Germany were down in excess of 3.5 percent.

Bank of England head Mervyn King had warned in a Tuesday speech about a possible "sharp and prolonged slowdown," and signaled possible future interest rate reductions.

The likelihood of continent-wide interest rate cuts has helped push the Euro and the pound down sharply against the dollar, with the Euro dipping below $1.30. Crude oil continued its decline, falling below $70 a barrel.

Futures pointed to triple-digit losses when trading on Wall Street opens.

In a sign of an evolving economic slowdown, exporters in Asia are seeing an alarming rise in inventories as demand from the United States and Europe declines, analysts said.

In Japan, major exporters like Toyota, Sony and NEC Electronics are being squeezed between the soaring value of the yen, which makes Japanese goods more expensive, and the eroding willingness of anxious American and European consumers to keep on buying.

Japan's benchmark Nikkei stock index fell 6.8 percent on Wednesday, ending three days of gains. The broader Topix index slumped 7.1 percent.