Stock markets lost ground on Thursday after disappointing US data and corporate earnings rekindled worries about a global recession later this year.
Oil prices rallied slightly on indications that short-term crude demand would hold up in a relatively strong US labor market and as China reopens after dropping its zero-Covid policy.
But "US recession fears are still here, and they won't be going away anytime soon," said Edward Moya, an analyst at the brokerage OANDA.
Wall Street stocks slumped again Thursday as a Federal Reserve Vice Chair Lael Brainard pledged a tough line on inflation, saying the central bank would "stay the course" in its fight.
"Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time," she said in remarks for an event in Chicago.
Joshua Mahony, a senior analyst at online trading platform IG, said: "Stocks are on the slide once again, as fears of prolonged periods of high interest rates cast aside recent optimism on falling inflation."
The recession fears dragged on equities, with the Dow losing 0.8 percent in New York, while main European indices showed losses of more than one percent at the close.
"An overnight sell-off in the US has soured sentiment," said AJ Bell's investment director Russ Mould.
In Davos, European Central Bank chief Christine Lagarde insisted, however, that the eurozone economy would fare "a lot better" this year than initially feared.
The "news has become much more positive in the last few weeks," Lagarde told an audience at the World Economic Forum.
Elsewhere, the New Zealand dollar and the country's stock market dipped after Prime Minister Jacinda Ardern's announcement that she would step down next month.
Expectations that US interest rates would not rise as much as previously feared weighed on the dollar but the yen recovered after Wednesday's slump, triggered by a Bank of Japan decision not to tweak monetary policy.
Several Fed officials have warned that the US central bank would continue to tighten its own policy until inflation is brought down from multi-decade highs.
After five straight rises, Norway left its benchmark interest rate on hold at 2.75 percent Thursday but hinted at a fresh rise in March.
- Key figures around 2145 GMT -
New York - Dow: DOWN 0.8 percent at 33,044.56 points (close)
New York - S&P 500: DOWN 0.8 percent at 3,898.85 (close)
New York - Nasdaq: DOWN 1.0 percent at 10,852.27 (close)
London - FTSE 100: DOWN 1.1 percent at 7,747.29 (close)
Frankfurt - DAX: DOWN 1.7 percent at 14,920.36 (close)
Paris - CAC 40: DOWN 1.9 percent at 6,951.87 (close)
EURO STOXX 50: DOWN 1.9 percent at 4,094.28 (close)
Tokyo - Nikkei 225: DOWN 1.4 percent at 26,405.23 (close)
Hong Kong - Hang Seng Index: DOWN 0.1 percent at 21,650.98 (close)
Shanghai - Composite: UP 0.5 percent at 3,240.28 (close)
Dollar/yen: DOWN at 128.40 yen from 128.80 yen on Wednesday
Euro/dollar: UP at $1.0833 from $1.0797
Pound/dollar: UP at $1.2392 from $1.2344
Euro/pound: DOWN at 87.39 pence from 87.43 pence
West Texas Intermediate: UP 1.1 percent at $80.33 a barrel
Brent North Sea crude: UP 1.4 percent at $86.16 a barrel