The S&P 500 continued its slide from yesterday in early trading in New York. It was trading down 3.82 points, or 0.35 percent at 9:41 a.m. EST.

News of continued Chinese tightening first broke in the Asian session today and stocks plunged. Chinese stocks lost the most, with the Hang Seng Index dropping 2.38 percent and the Shanghai Composite Index losing 2.42 percent. The Japanese Nikkei 225 Stock Average lost 1.78 percent.

European markets opened sharply down, but were able to pair some of its losses. The German DAX Index is down 0.13 percent while the UK FTSE 100 Index fared worse, losing 0.33 percent.

Various reports surfaced early in the Asian session reiterating the fact that China is clamping down to insure a recently announced policy is put into effect. Chinese authorities told banks today to implement an increased reserve ratio of 16 percent.

Bank stocks in both Asia and Europe were among the biggest losers. Industrial and Commercial Bank of China (1398.HK) fell 2.07 percent and Deutsche Bank (DBKGn.DE) is down 2.17 percent.

Evidence also emerged that several Chinese banks had indeed stopped issuing new loans for the rest of January, AFP reported. According research from Credit Suisse, six Chinese banks have stopped extending new loans since January 19.

On January 20 at the Asian Financial Forum, top Chinese banking official Liu Mingkang said the target rate for Chinese lending in 2010 is $1.1 trillion, down from $1.4 trillion in 2009. Even in 2009, Liu remarked that liquidity was the greatest in the first quarter and then decreased gradually, emphasizing China's commitment to control credit.

During the European session, Germany reported a better than expected business confidence figure. UK reported GDP growth of 0.1 percent for the third quarter, which marks the end of 6 consecutive quarterly contractions. However, economists expected a 0.4 percent growth, according to Bloomberg.

China Nikkei 225 Down