Markets dropped Thursday after a surprise rate cut from China spooked investors into worrying that the downturn in the world's second-largest economy may be bigger than they had expected. 
 
 A warning from Mario Draghi, the president of the European Central Bank, that risks remained to the economy of the 17 countries that use the euro didn't help matters. The bank's rate-setting panel had earlier unanimously decided to cut the main interest rate to a record low of 0.75 percent in an effort to stimulate growth. 
 
 The day has been dominated by central banks. The People's Bank of China cut its main lending rate by 0.31 percentage points to 6 percent and reduced its deposit rate by a quarter of a percentage point to 3 percent. It said the moves should boost growth in the second half of year but analysts said it hinted at a deepening economic concern. 
 
 Mark Williams, chief Asia economist at Capital Economics, said the move by the Chinese central bank may indicate that policymakers have had a sneak preview of June figures and "not liked what they've seen." 
 
 The Chinese authorities may have wanted to accentuate the impact of their rate cut by doing it alongside others in Europe to encourage talk of a coordinated response to the slowdown in the global economy. 
 
 "Again, though, this might simply underline the seriousness of the downside risks," said Williams. 
 
 The move overshadowed developments in Europe, which were expected by the markets. 
 
 The Bank of England, at the same time as China's central bank, approved another 50 billion pounds ($78 billion) injection into the ailing British economy. Under the so-called quantitative easing program, the Bank purchases government bonds from banks, in the hope that they will use the money to lend to businesses and consumers. The new purchases are expected to take 4 months to complete. 
 
 The ECB also delivered on market expectations by cutting its main interest rate. Investors remain skeptical, however, as to whether it will be enough to turn around the eurozone economy, which appears headed for recession. 
 
 "It is clear that market sentiment is somewhat mixed, and that news from Europe rightly continues to carry a game changing amount of weight," said Simon Furlong, a trader at Spreadex. 
 
 In Europe, Germany's DAX was 1.2 percent lower at 6,487 while the CAC-40 in France fell 1.5 percent to 3,219. The FTSE 100 index of leading British shares was 0.2 percent lower at 5,672. 
 
 The euro was hit particularly hard, falling 1.2 percent to $1.2373. 
 
 In the U.S., the Dow Jones industrial average was down 0.6 percent a 12,870 while the broader S&P 500 index fell 0.6 percent to 1,366. 
 
 Developments around the world offset some encouraging news on the U.S. jobs front in the run-up to Friday's nonfarm payrolls data, which often set the market tone for a week or two after their release. 
 
 The ADP private payrolls firm said 176,000 jobs had been created in June. That was above expectations and has raised predictions about the gain to be reported in Friday's government data. 
 
 "Take the ADP results with a handful of coarse salt as it is well-known to throw many a curveball," said Jennifer Lee, an analyst at BMO Capital Markets. "But I would love to be wrong this time." 
 
 Earlier in Asia before China's rate cut, Japan's Nikkei 225 index fell 0.3 percent to 9,079.80 and Hong Kong's Hang Seng was up 0.4 percent to 19,792.02. South Korea's Kospi slipped 0.1 percent to 1,875.49. Australia's S&P/ASX 200 dropped 0.1 percent to 4,169.20. China's Shanghai Composite tumbled 1.2 percent to 2,201.35. 
 
 Oil prices dipped alongside stocks, with benchmark oil for August delivery down 61 cents at $87.05 a barrel in electronic trading on the New York Mercantile Exchange. ||||| SYDNEY (MarketWatch) — Asian shares fell sharply Friday, with early losses exacerbated after reports of a lack of agreement on deeper fiscal union at the European Union summit. 
 
 Hong Kong’s Hang Seng Index /quotes/zigman/2622475 HK:HSI -0.74% dropped 2.7%, while the Shanghai Composite Index /quotes/zigman/1859015 CN:000001 +1.44% lost 0.6%. 
 
 Japan’s Nikkei Stock Average /quotes/zigman/5986735 JP:NIK -1.16% fell 1.5%, South Korea’s Kospi /quotes/zigman/1652118 KR:0100 -1.32% lost 2%, and Australia’s S&P;/ASX 200 index /quotes/zigman/1653884 AU:XJO -0.12% gave up 1.8%. 
 
 European and U.S. stocks had ended with sharp losses Thursday, setting the stage for a drop in Asia, after European Central Bank President Mario Draghi told reporters the European Union treaty prohibits “monetary financing.” The remarks came as the ECB cut its key cash rate to 1%, as expected. Read more on U.S. stocks. 
 
 The message from Draghi at Thursday’s press conference “could not have been clearer — don’t expect the central bank to save the euro zone with bigger purchases of government bonds or by lending to the International Monetary Fund,” said John Higgins, economist at Capital Economics. 
 
 Click to Play ECB news deflates U.S. stocks Stocks overlooked strong U.S. employment data and instead fretted over the ECB's signals that there would not be more aggressive easing measures.. 
 
 Draghi also said that the ultimate decisions and political responsibility are in the hands of European Union leaders, who were meeting at a summit in Brussels to further discuss the region’s debt crisis. Read more on ECB and Draghi's comments. 
 
 The summit failed to secure the full backing of the 27 nations for treaty changes to help fight the region’s debt crisis by more closely tying members-states’ fiscal policies. See report on European Union disagreement. 
 
 Meanwhile, China released some key economic data Friday, with the country’s consumer inflation rate easing sharply to 4.2% in November, compared to a 5.5% rise in October. See report on Chinese inflation data. 
 
 Other data later in the day showed some slowing in the Chinese economy, with industrial production and urban fixed-asset investment, a closely watched indicator of the Chinese economy, both rising less than expected. See report on Chinese industrial, investment data. 
 
 Major movers 
 
 Resource shares finished broadly weaker across Asia, with miners the worst performers in Australia, where BHP Billiton Ltd. /quotes/zigman/180893 AU:BHP 0.00% /quotes/zigman/270355/quotes/nls/bhp BHP -1.27% ended down 3.1%, and Rio Tinto Ltd. /quotes/zigman/176317 AU:RIO -0.78% /quotes/zigman/182541/quotes/nls/rio RIO -1.02% was lower by 3.6%. 
 
 In Hong Kong, Jiangxi Copper Co. /quotes/zigman/16454 HK:358 -0.72% /quotes/zigman/16456 JIAXF +3.81% fell 5.4%, and oil giant Cnooc Ltd. /quotes/zigman/29647 HK:883 -1.46% /quotes/zigman/274848/quotes/nls/ceo CEO -0.86% dropped 3.5%, while in Tokyo, JFE Holdings Inc. /quotes/zigman/304502 JP:5411 -2.52% /quotes/zigman/304509 JFEEF -1.69% lost 3.4%, and Nippon Steel Corp. /quotes/zigman/196304 JP:5401 -3.14% /quotes/zigman/196313 NISTF -3.77% retreated 3%. 
 
 Hong Kong-listed banks also saw selling, with Bank of Communications Co. /quotes/zigman/34374 HK:3328 0.00% /quotes/zigman/34373 BKFCF 0.00% down 3.8%, and with Agricultural Bank of China Ltd. /quotes/zigman/9118 HK:1288 -0.30% /quotes/zigman/122133 ACGBF -7.87% and HSBC Holdings PLC /quotes/zigman/13834 HK:5 -1.09% /quotes/zigman/207333/quotes/nls/hbc HBC -1.26% /quotes/zigman/13843 UK:HSBA +0.12% each falling 3.7%. 
 
 Among tech shares, Hynix Semiconductor Inc. lost 3% in Seoul, and Advantest Corp. /quotes/zigman/191696 JP:6857 -3.29% /quotes/zigman/191701 ADTTF -0.21% dropped 3% in Tokyo, after U.S. firms Texas Instruments Inc. /quotes/zigman/7971332/quotes/nls/txn TXN 0.00% and Altera Corp. /quotes/zigman/67862/quotes/nls/altr ALTR +0.08% cut their fourth-quarter earnings outlooks. Read more on Texas Instruments, Altera. 
 
 Among other major Japanese decliners, shares of Sony Corp. /quotes/zigman/197500 JP:6758 -2.04% /quotes/zigman/197524/quotes/nls/sne SNE -1.47% closed 3.3% lower, and Fanuc Corp. /quotes/zigman/192770 JP:6954 -1.18% /quotes/zigman/192775 FANUF -3.37% lost 3.1%, while those of Sharp Corp. /quotes/zigman/197304 JP:6753 -0.30% /quotes/zigman/197313 SHCAF +1.42% dropped 3.5%. 
 
 On the Japanese data front, the country revised its economic growth lower for the third quarter, to 1.4% from an original reading of 1.5%. The revisions incorporated new methods for compiling the data. See report on Japanese data. 
 
 Sarah Turner is MarketWatch's bureau chief in Sydney.
– The European Central Bank today cut its key interest rate by a quarter-point to .75%, its lowest level yet, in a move the New York Times describes as the ECB's "most aggressive" since the eurozone crisis hit. Though the move was widely expected, it does bring the benchmark rate to what was once considered the lower bound on the official rate. The action will make it cheaper for businesses and consumers to take loans. In a second, more surprising, move, the ECB also cut by a quarter-point the interest rate it pays banks on overnight deposits, bringing that to zero and giving banks reason to lend the money, rather than sock it away with the ECB. The Times notes that the moves leave the ECB with few crisis-combating tools left. The next step would probably involve a massive bond-buying spree, which could anger Germany because it doesn't want to get stuck bearing the brunt of any losses the ECB could suffer on its bond holdings. Today's other major rate news comes from China: The AP reports the People's Bank of China cut its main lending rate by 0.31 points to 6% and reduced its deposit rate by a quarter-point to 3%, moves analysts believe hint at deepening economic concern.