LONDON — The mood in financial markets turned sour Thursday after a round of disappointing economic news illustrated the scale of the global economic downturn.
Figures from Europe, Japan and China reminded investors that the world's economy is struggling, though a positive bond auction from Spain helped limit the retreat in markets.
Among the sobering news for investors was a survey in Europe pointing to a deepening recession in Europe, figures from Japan that showed the country's powerhouse export sector was continuing to suffer and a private survey of manufacturers in China that showed activity fell again in September, though at a slightly slower pace than August.
"The major concern is that .... equities will now find themselves struggling unless we see a step change in the health of the global economy," said Fawad Razaqzada, market strategist at GFT Markets.
In the wake of the figures, stocks suffered one of their biggest reverses in a while as the euro dropped below $1.30 for the first time in a week.
In Europe, the FTSE 100 index of leading British shares was down 0.6 percent at 5,852 while Germany's DAX fell 0.5 percent to 7,351. The CAC-40 in France was 0.8 percent lower at 3,503.
Wall Street was poised for a lower opening too, with both Dow futures and the broader S&P 500 futures down 0.3 percent.
Over recent weeks, stocks around the world have spiked sharply higher, while the euro headed above $1.30 for the first time since the spring — signs of increased optimism.
Markets were driven by a series of apparent breakthroughs in European leaders' efforts to solve the debt crisis and another monetary stimulus from the U.S. Federal Reserve.
So far this week, markets have largely treaded water despite a further monetary easing from the Bank of Japan and a continuing respite in Europe's debt crisis, evidenced by a further stabilization in the borrowing rates of euro countries like Italy and Spain.
"There have been clear signs this week that the shine has come off the summer's boost in optimism," said Jane Foley, an analyst at Rabobank International. "That said, these corrections remain modest in light of the moves registered since July."
The euro was one financial asset giving up some of its recent gains, trading 0.8 percent lower at $1.2946. This was despite Spain raising €4.8 billion ($6.2 billion) in a debt auction Thursday that saw strong demand and a drop in a benchmark interest rate.
Earlier, the losses in Asia were more acute than in Europe, largely because they enjoyed a stronger advance Wednesday in the immediate aftermath of the Bank of Japan's easing.
Japan's Nikkei 225 index dropped 1.6 percent to close at 9,086.98 while South Korea's Kospi shed 0.9 percent to 1,990.33. Hong Kong's Hang Seng lost 1.2 percent to 20,590.92.
In mainland China, the Shanghai Composite Index tumbled 2.1 percent to 2,024.84, the lowest closing in more than three years. The Shenzhen Composite Index lost almost 3 percent to 840.21.
Oil prices fell again in the wake of the economic figures, with the benchmark New York rate 80 cents lower at $91.17 a barrel.