Stock markets broke out of their earlier lethargy on Thursday to take a dive as investors worried about the damage new outbreaks of coronavirus might do to efforts at reviving the world economy.
A lower-than-expected number of US jobless claims last week helped sentiment, but the employment situation is still too dire for comfort, analysts said, and could easily deteriorate again.
"The markets appear cautious as new COVID-19 cases continue to rise in the world's largest economy," said analysts at the Charles Schwab brokerage.
Fawad Razaqzada at ThinkMarkets noted that there was "no obvious trigger" behind the abrupt downturn, and some suspected that seasonally reduced trading volumes may have been accentuating the downward trend.
"Markets are dealing with the summer lull," Scope Markets analyst James Hughes told AFP, and lower volumes had caused "some errative moves".
After a steady start, the Dow Jones index on Wall Street was nearly 500 points in the red by the late New York morning.
US stock weakness also pulled the rug from under key European markets, helping to push them into negative territory by the close.
Global politics remained a simmering worry for markets, as tensions between the US and its allies and China worsened over Hong Kong, trade and other issues.
"Risk appetite is struggling as the coronavirus spread is still not under control in most parts of the world and as geopolitical tensions between China and the West intensify," said Edward Moya, an analyst with OANDA.
A giant wall of money stumped up by governments and central banks has been providing support to global asset prices, but that offered stock prices little protection on Thursday.
Gold, by contrast, held above the $1,800 level it had breached for the first time in more than eight years on Wednesday on safe-haven buying.
There was better news in Asia earlier, where Shanghai rallied more than one percent as data showed a pick-up in inflation that indicates the world's number-two economy continues to improve.
Sydney rebounded slightly after Wednesday's sharp drop as Australia's second-biggest city Melbourne imposed a fresh lockdown on five million residents to combat a new virus outbreak.
- Key figures around 1540 GMT -
London - FTSE 100: DOWN 1.7 percent at 6,049.62 points (close)
Frankfurt - DAX 30: DOWN less than 0.1 percent at 12,489.46 (close)
Paris - CAC 40: DOWN 1.2 percent at 4,921.01 (close)
EURO STOXX 50: DOWN 0.8 percent at 3,261.17
New York - Dow: DOWN 1.8 percent at 25,598.37
Tokyo - Nikkei 225: UP 0.4 percent at 22,529.29 (close)
Hong Kong - Hang Seng: UP 0.3 percent at 26,210.16 (close)
Shanghai - Composite: UP 1.4 percent at 3,450.59 (close)
West Texas Intermediate: DOWN 1.1 percent at $40.46 per barrel
Brent North Sea crude: DOWN 0.5 percent at $43.08
Euro/dollar: DOWN at $1.1300 from $1.1330 at 2100 GMT
Dollar/yen: DOWN at 107.23 yen from 107.26 yen
Pound/dollar: UP at $1.2615 from $1.2610
Euro/pound: DOWN at 89.58 pence from 89.85 pence