US equity markets pared early losses in afternoon trade but for the most part closed down as financial stocks were sold off amid deepening worries about the health of the world’s major financial institutions.

In a volatile day of trading, the benchmark S&P 500 index fell as much as 2.4 per cent before regaining ground in late trade. It closed down 0.9 per cent at 1,276.59, while the Nasdaq composite index finished down 1.6 per cent at 2,177.01.