Concern about a potential economic slowdown in China pressured world stock indexes yesterday while Brent crude oil fell below $97 a barrel on sluggish demand and ample supplies.
Signs of disagreement between major economic powers on the need for extra stimulus further clouded the outlook.
China will not dramatically alter its policy because of any one economic indicator, Finance Minister Lou Jiwei said on Sunday, days after many economists lowered growth forecasts after seeing the latest set of weak data.
Investors worried a closely watched gauge of Chinese manufacturing, due today, could indicate activity was contracting.
'With China's statements not defining clear hurdles for stimulus, the market is grappling to guess which data point will tip the hand that controls the purse strings,' said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.
The Dow Jones industrial average fell 60.93 points, or 0.35 per cent, to 17,218.81, the S&P 500 lost 14.38 points, or 0.72 per cent, to 1,996.02 and the Nasdaq Composite dropped 53.23 points, or 1.16 per cent, to 4,526.56.
MSCI's global share index was down 0.8 per cent, while European shares were down 0.6 per cent.
In the US Treasuries market, long-dated yields dipped to their lowest in over a week on the view that lingering weakness in US economic data may force the Federal Reserve to maintain a dovish stance on raising interest rates.
Ten-year US Treasury notes were last up 3/32 in price to yield 2.57 per cent, from a yield of 2.59 per cent late Friday. US 30-year Treasury bonds added 6/32 to yield 3.29 per cent, from a yield of 3.3 per cent late Friday. The yield hit a session low of 3.26 per cent, its lowest since September 11.
The dollar softened as other major currencies recovered some ground after 10 weeks of gains by the dollar index. The euro, which traded at nearly $1.40 in May, was slightly higher against the dollar at $1.2830 after touching a high of $1.2867.
The Australian dollar, though, fell half a per cent to a seven-month low of $0.8826, reflecting Australia's dependency on Chinese appetite for its natural resources exports.
Brent crude oil fell below $97 a barrel, dropping for the third session in four, as sluggish demand and ample supplies outweighed expectations of a cut in oil output from the Organization of the Petroleum Exporting Countries.