It has been another volatile session on Wall Street

The Dow Jones closed down 208 points or 1.6% at 13,029. The more technology- based Nasdaq index fell 43 points or 1.7% at 2,499.

Shares were hit by warnings of tough times to come from two big retailers: Wal-Mart and Home Depot.

There was also news that a big fund manager was struggling.

The falls came despite the Federal Reserve saying it would inject more funds into financial markets if needed.

Central bank action

To ease fears over available credit, sparked by the downturn in the mortgage sector, the Fed has already pumped billions of dollars of emergency funds into the banking system in recent days - twice on Friday and again on Monday.

The European Central Bank (ECB) and the Bank of Japan have made similar moves.

On Tuesday the ECB injected another 7.7bn euros ($10.4bn; �5.2bn) into the markets but said that conditions were returning to normal.

Wall Street's falls knocked European stocks, with London's FTSE 100 closing 1.2% lower and Frankfurt's Dax falling 0.7%.

Nervous investors

The news that Sentinel Management Group, which manages $1.6bn in funds, wanted to stop investors being able to withdraw their money did nothing to improve the mood.

The day's biggest faller was Wal-Mart, the world's biggest retailer, which fell 5.1% after lowering its profit forecast because its customers are straining under economic pressures such as high oil prices.