In early trading in Europe, Britain's FTSE 100 was down 0.4 percent at 5,641.23. France's CAC-40 shed 0.55 percent to 3,157.79, while Germany's DAX gained 0.07 percent to 6,442.17.
After falls Tuesday, Wall Street was set to recover modestly Wednesday with Dow futures up 0.19 percent at 12,609 and S&P 500 futures also 0.19 percent higher at 1,338.
Companies start reporting second-quarter results this week and investors were dismayed when chip maker Advanced Micro Devices said Tuesday that weaker sales in China and Europe led to an 11 percent drop in revenue in the April to June period. The company had previously forecast a gain of 3 percent. In Britain, retailer Marks & Spenser reported a 2.8 percent drop in sales. J.P. Morgan and Google report results later this week.
Meanwhile, Europe's debt crisis has hurt investor and consumer confidence, and some of the region's countries, such as Greece and Spain, are in deep recession. Some analysts say policymakers in the Europe, the U.S. and Asia should implement monetary and fiscal stimulus to prevent global growth from slowing further.
"The eurozone needs dramatic action to stop the downward spiral," said Jan Amrit Poser, chief economist at Bank Sarasin. "The economic cycle in the rest of the world hinges substantially on such intervention, but accompanying actions by central banks in the U.S. and emerging economies are also needed to halt an impending downturn."
Fiscal stimulus is not on the cards for European governments who are cutting spending instead. However the European Central Bank cut rates last week and European finance ministers Tuesday cobbled together a plan to get €30 billion in funding to Spain this month to recapitalize its banking sector. Relief over that was cut short as Germany's constitutional court said Tuesday it may take months to decide whether Europe's permanent bailout fund is legal.
"Once again these events have highlighted that the crisis in Europe owes a lot to issues regarding governance and underpins the worry that the pace of movement towards greater fiscal ties within the Eurozone will be disappointingly slow," said Rabobank foreign exchange analyst Jane Foley.
The euro hit year lows against the dollar Tuesday and has only recovered marginally, up 0.28 percent to $1.2281.
Japan's Nikkei 225 index fell 0.1 percent to 8,851.00 ahead of a meeting of the Central Bank of Japan, while Hong Kong's Hang Seng added 0.1 percent at 19,419.87.
The People's Bank of China cut lending rates last week. But slowing trade growth in China and weak jobs creation in the U.S. have investors worried that markets could languish until the Federal Reserve implements another round of Treasury bond purchases known as quantitative easing.
"There was nothing to support hope for more quantitative easing," said Tim Condon, head of Asia research at ING. "Eurozone debt crisis anxiety, China growth anxiety and earnings anxiety quickly overwhelmed."
Analysts will be combing the minutes of the latest Fed meeting, scheduled to be released later Wednesday, for hints of the central bank's view on the economy and possible policy moves.
On Tuesday, the Dow Jones industrial average closed down 0.7 percent at 12,653.12. The Standard & Poor's 500 fell 0.8 percent to 1,341.47. The Nasdaq composite was down 1 percent at 2,902.33.
Benchmark oil for August delivery was up 67 cents at $84.58 a barrel in electronic trading on the New York Mercantile Exchange. Crude dropped $2.08 to settle at $83.91 on Tuesday in New York.
In currencies, the dollar dropped to 79.25 yen from 79.45 yen.