Investors pulled back from stocks amid concerns over U.S. and European growth and the possibility that Britain's credit rating may be at risk.
Wall Street appeared to be headed for a slide: Dow Jones futures fell 0.5 per cent to 12,015, while S&P 500 futures were down 0.5 per cent to 1,278. Nasdaq futures sank 0.7 per cent to 2,257.
The declines mirrorred losses in Europe and Asia, where the FTSE 100 lost 1.2 per cent, the CAC 40 sank 1 per cent, the DAX slipped 1.4 per cent and the Hang Seng fell 0.9 per cent. Banks were among the hardest hit. Among the major exchanges, only the Nikkei closed without losses, flat at 9,449.46.
The losses came as figures indicated that the euro zone recovery may be slowing in the second quarter. Even data out of Germany, considered Europe's engine of growth, showed that industrial output fell 0.6 per cent in April.
Adding to investors' concerns was a statement by Moody's Investors Service that the outlook for Britain's prized triple-A credit rating remains stable, but weaker growth and slippage in the government's fiscal plans could lead to a reassessment.
Gold fell, after U.S. Federal Reserve Chairman Ben Bernanke offered no hints of further U.S. monetary easing in a speech on Tuesday, taking pressure off the U.S. dollar. U.S. gold futures for August delivery fell $6.50 (U.S.) an ounce to $1,537.50.
The loonie declined to $1.0202 (U.S.).
Copper declined 1 percent amid concerns over economic growth. Benchmark copper on the London Metal Exchange traded at $9,046 a tonne after dipping to $9,026 a tonne.
Sonali Verma