World stocks fell as investors digested soft Chinese economic data and a lack of progress in US-China trade talks, though oil companies were a bright spot as crude hit a three-and-a-half-year high.
MSCI's world equity index, which tracks shares in 47 countries, was down 0.3 per cent.
Futures pointed to a lower open for US equities, with S&P 500 e-minis down 0.2 per cent.
European stocks snapped early losses, with the benchmark Stoxx 600 rising 0.2 per cent and helped by oil stocks, that rose by nearly a per cent.
The UK's FTSE 100 and Italy's FTSE MIB, both of which have high weightings to energy stocks, rose by 0.4 per cent.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.2 per cent, after China reported weaker-than-expected investment and retail sales in April and a drop in home sales, clouding its economic outlook even as policymakers try to navigate debt risks and defuse a heated trade row with the US.
Mixed messages in US-China trade talks also weighed on sentiment for global investors.
The two countries are still "very far apart" on resolving trade frictions, US ambassador to China Terry Branstad said yesterday as a second round of high-level talks was set to begin in Washington.
US President Donald Trump drew ire from lawmakers after suggesting he would help Chinese firm ZTE Corp, that flouted US sanctions on trade with Iran and North Korea, with intelligence officials also saying the decision threatens national security.
Oil prices hit a three-and-a-half-year high yesterday, supported by tight supply and planned US sanctions against Iran that are likely to restrict crude oil exports from one of the biggest producers in the Middle East.
Brent crude futures, the international benchmark for oil prices, rose to as much as $79.22 per barrel, its highest level since November 2014. In fixed income, the US 10-year bond yield rose above the key level of three per cent, sending borrowing costs higher in a number of other countries.
In Europe, the benchmark German bond yield rose to 0.636 percent, its highest level in three weeks, with investors also taking note of hawkish commentary from Bank of France Governor Francois Villeroy de Galhau, who said the European Central Bank could soon give guidance on its first rate hike.
"We have this Galhau interview and he was very much pointing to rate hikes after the end of QE (quantitative easing)," said DZ Bank rates strategist Daniel Lenz, explaining the weakness in euro zone debt markets.
“And we still have a high oil price and US Treasury yields above three per cent.”
Against a basket of six major currencies, the dollar index gained 0.46 per cent.