After an optimistic start to the trading week, global stock markets have lost their steam after subdued German growth figures and disappointing US economic data reinforced fears over the global economy.
Germany reported that growth almost ground to a halt in the second quarter, in another downbeat note for the global economy following similarly disappointing readings from France and the United States.
Quarterly growth was only 0.1% on lagging consumer spending and construction investment - putting a damper on recovery driven by booming exports that power Europe's biggest economy.
Markets fell even lower after US data showed that builders broke ground on fewer single-family homes in July, leaving home construction at depressed levels.
In Europe, Germany's DAX was 2.4% lower at 5,876, while the CAC-40 in France fell 1.2% to 3,182. Britain's FTSE 100 of leading shares was down 1.21% at 5,285.
Milan markets, in the first test of 45.5 billion euro (£39.9 billion) in emergency austerity measures announced last week, was down 3.2% at 15,317.
Wall Street was also headed for a lower opening after posting impressive gains on Monday on a round of corporate deals. Dow futures were down 0.7% to 11,328, while S&P 500 futures fell 1% to 1,186. The euro was also weighed down by the growth data, trading 0.3% lower on the day at 1.438 US dollars.
Jane Foley, senior currency strategist at Rabobank International, said the German figures had "taken the wind out of the euro's sails."
Earlier, Asian shares traded higher in the wake of the previous day's advance in Europe and the US. Japan's Nikkei 225 index rose 0.2% to close at 9,107.43, while South Korea's Kospi jumped 4.8% to 1,879.87 following a public holiday.
However, Hong Kong's Hang Seng fell 0.2% to 20,212.08 and mainland Chinese shares snapped a five-session winning streak as investors cashed in on recent gains. The Shanghai Composite Index lost 0.7% to 2,608.17, and the Shenzhen Composite Index lost 0.7% to 1,166.84.