Wall Street was slammed again on Thursday as concerns over European debt problems and sluggish U.S. economic growth spurred broad sell-off.

The Dow Jones Industrial Average plunged 419.63 points, or 3.68 percent, to end at 10,990.58 after losing as much as 528.61 points.

The broader Standard & Poor's 500 tumbled 53.24 points, or 4.46 percent, to 1,140.65, and the tech-heavy Nasdaq Composite Index also fell sharply, loosing 131.05 points, or 5.22 percent, to close at 2,380.43.

The Chicago Board Options Exchange' s volatility index, or so-called "fear index," spiked more than 40 percent by the close.

Big banks were hit most because of their exposure to the European debt, leading the declines in the market. The Financial Select Sector SPDR ETF, which tracks financial stocks of the S&P 500 Index, dropped 4.8 percent and the KBW Bank Index ETF fell 5.5 percent.

Worries about European debt problems contributed most to Thursday' s steep sell-off. A meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy on Tuesday didn't result in any plan to increase the size of euro zone's rescue fund or begin sales of euro bonds, further disappointing markets.

Dismal U.S. economic data further dampened sentiment as investors worried the U.S. economy was in danger of a double-dip recession.

The Labor Department said on Thursday that the number of people applying jobless benefits rose 9,000 to 408,000 last week, worse than economists had expected.

The department also reported that the consumer prices rose 0.5 percent in July, the largest gain since March, after falling 0.2 percent in June.

Even worse, the Philadelphia Federal Reserve Bank said its business activity index dropped to minus 30.7 from positive 3.2 the month before, far below expectation.

Echoing the weak data, Morgan Stanley and Goldman Sachs slashed their forecasts for global economic growth, citing weaker-than-expected growth in the second quarter of this year, along with slower global trade growth and additional austerity measures announced in several countries.

Morgan Stanley analysts said the U.S. and Europe are "dangerously close to recession", adding that recent policy errors, especially Europe' s slow and insufficient response to the sovereign debt crisis and the drama around lifting the U.S. debt ceiling, have weighed down on financial markets and eroded business and consumer confidence.

Goldman Sachs took a similar move on Thursday, lowering its forecasts for world economic growth to 4.0 percent in 2011 and 4.4 percent in 2012, down from 4.1 percent and 4.6 percent respectively.

The pessimistic reports, together with the latest string of dismal economic data, gave the already fragile market another blow. Money flooded into safe havens like U.S. Treasuries and gold, with Gold futures spiking to another record high.

On the Comex division of the New York Mercantile Exchange, gold for December delivery added 28.20 dollars, or 1.6 percent, to end at 1,822 an ounce.

However, on expectation of weaker demand, Crude prices plummeted 5.20 dollars, or 5.94 percent to settle at 82.38 dollars a barrel on the New York Mercantile Exchange.