Stocks on both sides of the Atlantic, US Treasuries and gold fell, though pared some of their earlier losses, amid concern about the reduction of central bank stimulus in the world's largest economy and worry about the prospects for China, the world's second-largest economy.
Equities in China slumped, sending the country's benchmark CSI 300 Index down 6.3 per cent from the previous close, amid signs the nation's banks are increasingly wary of lending money to customers.
In the US investors are still trying to assess how soon the Federal Reserve might start paring back its US$85 billion a month bond-buying program, following Chairman Ben Bernanke's comments on June 19 that it might begin this year and end the program in mid-2014.
"I agree fully with the chairman that we should dial back on the stimulus" should "we achieve what the 19 of us forecast," Federal Reserve Bank of Dallas President Richard Fisher said in a speech in London on Monday, according to Bloomberg News. He also said investors were overreacting to the Fed's plans.
In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.39 per cent, the Standard & Poor's 500 Index slid 0.85 per cent and the Nasdaq Composite Index dropped 0.82 per cent. Gains in shares of Microsoft, up 2.4 per cent, and Johnson & Johnson, up 1.9 per cent, helped limit losses in the Dow.