Stocks fell in Asia and Europe as technology stocks tumbled after U.S. microprocessor maker AMD said first-quarter sales had fallen below its expectations and a revenue warning from French bank BNP Paribas underlined banking sector worries.

Alcoa said late Monday its first-quarter profit dropped by more than half because of rising costs and a weakening U.S. dollar. Investors were underwhelmed as well by the chip making sector: Advanced Micro Devices said sales for the three months ended March 29 fell 15% from the same period a year ago, due to product delays and tough competition from Intel, while Novellus Systems lowered its estimate for first-quarter earnings.

In addition to the dreary earnings data, mixed news from Washington Mutual and a bleak outlook for the global financial system from the International Monetary Fund led to some caution among investors — who sent stocks soaring last week on the growing belief that the worst of the credit crisis has passed.

Although Washington Mutual said it will receive a larger-than-anticipated $7 billion by selling a stake to an investment group, it also said it will lose $1.1 billion during the first quarter, take a provision for loan losses of $3.5 billion, and lower its quarterly dividend to shareholders to a penny from 15 cents.

Meanwhile, the IMF said that despite "unprecedented intervention" the Federal Reserve and other central banks, "financial markets remain under considerable strain." Many experts have said it will be hard for the credit markets to loosen up with the housing market still on the decline: the National Association of Realtors said Tuesday that February's pending home sales fell 1.9% compared to January, worse than many analysts had predicted.

Tuesday's dreary reports arrive ahead of the release of minutes from the Federal Reserve's meeting March 18, when it lowered interest rates by three-quarters of a point to 2.25%.

In Asia, Japan's benchmark Nikkei 225 stock index fell 1.5% to 13,250.43. The wider Topix index of all shares listed in the first section of the Tokyo Stock Exchange fell 1.8% to 1,282.69.

In afternoon trading in Europe, the UK's FTSE 100 index slipped 1%, Germany's DAX index lost 1.2% and Frances CAC-40 dropped 1.1%.

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