Lackluster manufacturing data from around the world sparked the selling this week, notably Chinese factory activity shrinking for the 14th straight month and British output at three-year lows on Tuesday.
Economic growth in the euro zone will be slow but steady in the second quarter, surveys indicated, underscoring concerns about the vulnerability of the bloc's upturn.
Retail sales also fell across the euro zone as a whole in March, adding to the cautionary tone.
The price of copper, often viewed as a growth barometer, fell due to selling triggered by a stronger dollar and manufacturing surveys from around the world.
Benchmark copper
MSCI's all-country world index <.MIWD00000PUS> of stock performance in 46 countries fell 0.98 percent, while the pan-regional FTSEurofirst 300 index <.FTEU3> fell 1.2 percent to 1,302.72 points, its lowest close in nearly four weeks.
The index of leading European shares lost 1.7 percent on Tuesday.
"We may have the odd move higher, but we remain in a longer-term bear market," said Andreas Clenow, chief investment officer of ACIES Asset Management in Zurich, Switzerland.
Shares of global diversified miner BHP Billiton (>> BHP Billiton plc) tumbled 5.8 percent, hit by news of a 155 billion-real ($43.5 billion) lawsuit filed in Brazil against iron ore miner Samarco, owned by BHP and Vale (>> Vale SA).
On Wall Street stocks fell even as data showed the vast U.S. services sector expanded in April as new orders and employment accelerated, bolstering views that economic growth would rebound after almost stalling in the first quarter.
However, other data showing private employers hired the fewest workers in three years in dimmed the U.S. economic outlook.
The Dow Jones industrial average <.DJI> fell 103.24 points, or 0.58 percent, to 17,647.67. The S&P 500 <.SPX> slid 13.61 points, or 0.66 percent, to 2,049.76 and the Nasdaq Composite <.IXIC> lost 39.47 points, or 0.83 percent, to 4,723.75.
The ADP private sector employment report showed hiring in April fell to its lowest levels in three years. The report acts as a precursor to the more comprehensive government non farm payrolls data, due on Friday.
"Businesses are a little more worried about the outlook than they were previously. They're a bit cautious," said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.
Price, who sits on Ameriprise's global asset allocation committee, said the S&P 500 may experience two drops of up to 10 percent this year, but will end the year ahead about 6 percent.
U.S. Treasury yields fell to their lowest in two weeks, with the price of the benchmark 10-year Treasury note
German Bunds steadied, with soft data underpinning demand. The 10-year Bund yield was flat at 0.20 percent
The dollar index <.DXY>, which measures the greenback against a basket of six major trading currencies, rose 0.39 percent to 93.308. The dollar strengthened against the yen 0.57 percent to 107.20 and against the euro
Oil prices reversed gains as a bigger-than-expected rise in U.S. crude stocks tempered concerns about reduced production in Canada's oil sands region due to a wildfire.
U.S. crude stocks grew by 2.8 million barrels in the last week, versus expectations of a 1.7 million barrel build, Energy Information Administration data showed. Gasoline stocks also posted a surprise increase.
Brent crude
(Story corrects to say three-year lows, not three-month lows, in paragraph 2)
(Reporting by Herbert Lash; Editing by Chizu Nomiyama and Meredith Mazzilli)
By Herbert Lash
