LONDON: World stock markets cooled on Tuesday following a rally that kicked off the week as concern about "tepid" global growth returned to the fore and oil prices retreated from strong gains a day earlier.
Fears over Britain's future in the European Union again dogged the currency market, heaping further pressure on sterling after it fell to near seven-year lows Monday.
The euro also fell in response to poorly-received German data indicating looming clouds on the horizon for Europe's biggest economy and the mining sector took another hit.
Wall Street followed Europe's lead into the red with lower oil prices also weighing on investors' minds and countering solid earnings reports from several US big hitters.
"Domestic stocks are trimming some of their recent run, following a down day in Asia and pressure on European markets, with financials losing ground and energy stocks being bogged down by lower crude oil prices," said analysts Charles Schwab in a note to investors.
"The Street is digesting a plethora of mixed earnings and economic data, with Dow member Home Depot and Macy's topping forecasts, along with domestic existing home sales, while US Consumer Confidence fell more than anticipated," it added.
Retreating from a strong rally on Monday, US oil prices fell 62 cents to $32.77 a barrel on the New York Mercantile Exchange.
Despite Home Depot and Macy's posting solid earnings, US stocks were 0.6 percent lower about 45 minutes into trade.
Global mining giant BHP Billiton posted a net loss for the six months to December 31 of $5.67 billion (5.15 billion euros) and slashed dividends as plunging commodity prices hammered its bottom line and the company warned of a prolonged period of volatility.
In Europe, London's benchmark FTSE 100 index closed 1.2 percent lower, weighed down by oil and mining shares despite a surge in London Stock Exchange Group's share price after it announced it was in merger talks with its German rival, Deutsche Boerse.
Similarly the eurozone's main indices in Germany and France also extended earlier losses, with Frankfurt's DAX 30 closing 1.6 percent lower, while the Paris CAC 40 lost 1.4 percent compared with Monday's close.
International Monetary Fund chief Christine Lagarde told a forum in Dubai that the world economy was going through a "tepid" recovery, although growth in advanced economies should be higher.
- Global concerns hit German exporters -
German business confidence fell to its lowest level in over a year, dropping for the third consecutive month in February, the Ifo economic institute said.
Analysts said the reading showed that Germany's powerful export industry was starting to wake up to global concerns roiling international markets.
ING's Carsten Brzeski said the data showed that "global events have finally reached German companies' boardrooms".
"Expectations have taken another sharp hit from recent market turmoil, the adverse impact of low oil prices and renewed concerns about a slowing of the Chinese economy," he said.
Asia's share rally stalled Tuesday, with markets battling a fresh fall in the price of oil and renewed fears for the Chinese economy.
In Tokyo, Japanese stocks fell as a stronger yen hit exporters.
Almost 200 bosses of top British companies urged voters to keep Britain in the EU, warning that an exit from the bloc would threaten jobs.
Some 198 business leaders including Roger Carr, chairman of BAE Systems, BP chief executive Bob Dudley and Ron Dennis, chief of F1 team McLaren, wrote a joint letter published in the Times daily, backing Prime Minister David Cameron's deal to reform the EU.
The letter comes as a boost for Cameron days after charismatic London mayor Boris Johnson announced he was backing a so-called Brexit in the June 23 referendum.
Cameron wants Britain to remain part of a reformed EU.
- Key figures around 1700 GMT -
London - FTSE 100: DOWN 1.25 percent at 5,962.31 points (close)
Frankfurt - DAX 30: DOWN 1.64 percent at 9,416.77 points (close)
Paris - CAC 40: DOWN 1.40 percent at 4,238.42 points (close)
EURO STOXX 50: DOWN 1.59 percent at 2,887.38 points
Tokyo - Nikkei 225: DOWN 0.37 percent 16,052.05 points (close)
Shanghai - composite: DOWN 0.81 at 2,903.33 points (close)
Hong Kong - Hang Seng: DOWN 0.25 percent at 19,414.78 points (close)
New York - Dow: DOWN 0.63 percent to 16,516.26 points
Euro/dollar: DOWN at $1.1015 from $1.1029 on Monday
Dollar/yen: DOWN at 112.14 yen from 112.91 yen on Monday
Euro/sterling: UP at 78.53 pence from 77.96 pence
Sterling/dollar: DOWN at $1.4029 from $1.4148
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