LONDON (AP) - World stocks slid and the euro dropped to a two-month low against the dollar yesterday as investors fretted over Ireland's political turmoil following the government's request for a bailout and after North Korea's artillery attack on South Korean territory.

In Europe, the FTSE 100 index of leading British shares closed down 95.55 points, or 1.8 percent at 5,581.28 while Germany's DAX tumbled 117.05 points, or 1.7 percent, to 6,705. The CAC-40 in France ended 94.47 points, or 2.5 percent, lower at 3,724.42.

In the US, the Dow Jones industrial average was down 164.95 points, or 1.5 percent, at 11,013.63 around midday New York time, despite encouraging US economic growth figures, while the broader Standard & Poor's 500 index dropped 18.48 points, or 1.5 percent, to 1,179.36.

Sentiment, already downbeat as Europe's debt crisis shows few signs of abating, was hit further by news that North Korea bombarded the South Korean island of Yeonpyeong, near their disputed western border, setting buildings ablaze and killing at least two marines, according to South Korean officials

"As if all of the European sovereign issues weren't enough, and they are, markets were further roiled as North Korea, with impeccable timing, decided to show its military might," said Jennifer Lee, an analyst at BMO Financial Group.

Reports of North Korea's attack on its neighbor came as Asian trading was drawing to a close. South Korea's Kospi closed down 0.8 percent at 1,928.94.

Elsewhere, Hong Kong's Hang Seng index tumbled 2.7 percent to 22,896.14 and China's Shanghai Composite Index shed 1.9 percent to 2,828.28 amid expectations Beijing will take more steps to cool inflation and possibly growth. Japan's markets were shut for a national holiday.

There was muted reaction to the news that the US economy grew by more than previously predicted during the third quarter of the year. The Commerce Department reported that the world's largest economy grew at an annualised rate of 2.5 percent, up on the previous estimate of two percent.

Analysts said today would likely be a volatile day as traders on Wall Street look to square up positions before they head off for the Thanksgiving break.

In the oil markets, benchmark crude for January delivery was down 78 cents to $80.96 a barrel in electronic trading on the New York Mercantile Exchange.