US shares seen as exposed to the disaster as well as economically sensitive stocks slid.

Insurer American International Group Inc fell 4 percent to $35.97, while General Electric Co dropped 5 percent to $18.93.

A Japanese nuclear power plant sent low levels of radiation floating toward Tokyo, prompting people to flee the capital and others to stock up on essential supplies.

The Dow Jones industrial average fell 260.20 points, or 2.17 percent, at 11,732.96. The Standard & Poor's 500 Index dropped 28.33 points, or 2.19 percent, at 1,268.06. The Nasdaq Composite Index lost 72.10 points, or 2.67 percent, at 2,628.87.

Japanese stocks slid 10.6 percent, posting their worst two-day losing streak since 1987. European shares dropped 3.5 percent, led by nuclear-related utilities, luxury groups and assurance companies.

Nick Kalivas, an analyst at MF Global in Chicago, said a prolonged crisis could cause consumers and businesses to cut spending, but saw it as unlikely at this stage. "If we get into a hunker-down attitude, the market could have a lot further to go," he said.