Just when you thought it was safe

Stock markets tumbled again yesterday. Reuters reports:

U.S. stocks plunged on Tuesday in their second-worst sell-off of the year as the impact of losses in the subprime mortgage group cascaded across the financial sector, knocking down shares of investment banks and traditional lenders.

The Mortgage Bankers Association reported the proportion of mortgages in the initial stages of foreclosure rose to the highest rate on record, while the chief executive of the largest U.S. home lender said the subprime mortgage industry is now in a "liquidity crisis." The subprime sector caters to borrowers with weak credit...

The Dow Jones industrial average dropped 242.66 points, or 1.97 percent, to end at 12,075.96. The Standard & Poor's 500 Index slid 28.65 points, or 2.04 percent, to 1,377.95. The Nasdaq Composite Index tumbled 51.72 points, or 2.15 percent, to 2,350.57...

U.S. Treasury debt prices climbed on Tuesday as investors sought a safe harbor. Concerns about risky investments also propelled the yen higher against the dollar.

The benchmark 10-year U.S. Treasury note was up 17/32, with the yield at 4.495 percent...

Wall Street got some discouraging news before Tuesday's opening bell when Commerce Department said retail sales, excluding automobiles, unexpectedly slipped 0.1 percent in February, raising worries about economic growth. The month's overall retail sales, though, rose 0.1 percent, below forecasts for a gain of 0.3 percent.

In Europe, the ZEW index of German investor and analyst expectations for economic growth in six months rose to 5.8 in March, the highest level in eight months, from 2.9 in February. You would not have guessed so from the performance of European stocks yesterday. Bloomberg reports:

European stocks fell for a second day after a report showed U.S. subprime mortgage delinquencies rose to a four-year high, deepening concern credit markets are deteriorating in the world's biggest economy...

The Stoxx 600 fell 1.1 percent to 361.56 at the close in London. The Stoxx 50 lost 1.2 percent, while the Euro Stoxx 50, a measure for the 13 nations sharing the euro, slid 1.2 percent...

National benchmarks dropped in all 18 western European markets. France's CAC 40 sank 1.2 percent, while Germany's DAX slid 1.4 percent. The U.K.'s FTSE 100 slipped 1.2 percent.

Earlier in the day, Asia had started the ball rolling downhill. Again from Bloomberg:

The Morgan Stanley Capital International Asia-Pacific Index lost 0.4 percent to 143.81 at 8:02 p.m. in Tokyo. It had gained 4.4 percent in the past week. Japan's Nikkei 225 Stock Average dropped 0.7 percent to 17,178.84. Markets also fell in Australia, South Korea, Singapore, Malaysia, Hong Kong, Pakistan and Sri Lanka.