New York, Nov 24 (DPA) US stocks fell sharply amid an exchange of fire on the Korean Peninsula and fresh concerns that the eurozone's debt crisis could spread.

North Korea fired artillery shells at a South Korean island near their disputed western sea border. South Korea returned fire for about one hour, and both sides warned of massive retaliation if there were further attacks.

German Chancellor Angela Merkel meanwhile warned that the euro was increasingly under after the Irish government was forced to accept a bailout. Investors fear Portugal and Spain could be next.

In the US, the Federal Reserve sharply cut its forecast for economic growth and employment in the coming years.

The blue-chip Dow Jones Industrial Average fell 142.21 points, or 1.27 percent, to 11,180.73. The broader Standard and Poor's 500 index plunged 17.11 points, or 1.47 percent, to 1,180.73. The technology-heavy Nasdaq Composite Index tumbled 37.07 points, or 1.46 percent, to 2,494.95.

The US currency rose against the euro to 74.81 euro cents from 73.41 euro cents Monday. The dollar fell against the Japanese currency to 83.16 yen from 83.27 yen.