Global stocks have fallen, tracking a slump in Asia in response to a widening crackdown on the tech sector in China and concern over the strength of the country's economic recovery, while oil prices sagged on supply uncertainty.
The pace of economic recovery from the COVID-19 pandemic and its impact on inflation and central bank policymaking continues to drive markets, with the US Federal Reserve overnight signalling no immediate plans to tighten monetary policy.
All eyes will be on the European Central Bank later in the session on Thursday, when it is set to release a strategy update that could allow for higher inflation.
The MSCI's leading index of global stocks was down 0.4 per cent in early European trading, tracking a 1.6 per cent decline in the equivalent index of Asia shares outside Japan to its lowest level since mid-May.
That had been fuelled by China's move to rein in its tech giants, with the most recent being US-listed Didi, which was ordered to pull its app from stores.
Despite its drop, the global index remains in a broad trading range established since late June and just off its record high. The STOXX Europe 600, a broad gauge of Europe's biggest companies, meanwhile, was down 1.2 per cent.
In tandem with the tech crackdown, guidance toward rate cuts from Chinese policymakers has also spooked some investors by highlighting softness in China's economy - weak loan growth and slow demand - which threatens the pace of the global recovery.
The Chinese cabinet said on Wednesday that policymakers will use timely cuts in the bank reserve requirement ratio (RRR) to support the real economy, especially small firms.
The yield on 10-year Chinese sovereign debt posted its sharpest fall in nearly a year on Thursday, dropping to 2.993 per cent, the lowest since August.
Global bond prices more broadly rallied, with the US 10-year up nearly 4 basis points, extending price moves seen earlier in the week and leading to a "serious debate" about their cause, said Deutche Bank analyst Jim Reid.
Some consider the move a sign the market is re-pricing the potential for the economy to be hit by secular stagnation after the pandemic, while others point to technical drivers including reduced supply from the Fed and higher demand to buy.
Mark Haefele, Chief Investment Officer, UBS Global Wealth Management, said despite the dip in US yields, the Swiss adviser to many of the world's super-rich expected the benchmark to bounce back.
"With the expectation of a taper announcement from the Fed over the next few months, robust economic growth driving continued strength of nonfarm payrolls, and further [post-pandemic economic] reopening, we expect the 10-year yield to reach 2 per cent by the end of the year."
In currency markets, the dollar edged lower against a basket of major peers, down 0.2 per cent. Cryptocurrencies were sold on negative comments from Chinese policymakers and bitcoin fell to a more than one-week low of $32,623.
Oil was under pressure, as a wave of new viral infections sweeps Asia and the world that could curb demand, while traders anticipate a possible rise in supply after the collapse of talks among producers.
Brent futures were last down 1.1 per cent at $72.64 a barrel while US crude fell 1.4 per cent.