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"There's a big debate going on about how quickly the US economy  is slowing down," he said, adding that investors remained worried  about the stock market slump in Asia.

Dick Greenm a market analyst with US-based Briefing.com said: "Right  now, everything and anything is viewed in a negative light."

NYSE down

In midday trading on Wall Street, the Dow Jones Industrial Average was down 0.17 percent at 12,247.96, while the tech-laden Nasdaq composite was down 0.25 percent at 2,410.14.

The broad-market Standard and Poor's 500 index lost 0.11 per cent to 1,405.25.

At the close in Europe, the London FTSE 100 showed a loss of 0.9 per cent to 6,116 points, while in Paris the CAC 40 fell 1.05 per cent to 5,458.40 points and in Frankfurt the Dax shed 1.12 per cent to 6,640.24 points.

Earlier on Thursday all three European markets had risen following two days of heavy falls that were linked to concerns about slowing economic growth in the United States and a possible overheating on the Chinese stock market.

Downward correction

On Tuesday, US stocks had their worst downturn since the aftermath of the September 11, 2001 attacks, while the Shanghai stock exchange had its biggest fall in a decade on the same day.

Asian investors had been in a state of high tension on Thursday amid lingering fears that Tuesday's sell-off signalled the start of  a major downward correction.

"Investors are still wondering if the storm is actually over or not," said Masatoshi Sato, a senior strategist at Mizuho Investors Securities in Tokyo.

"Aftershocks in some markets, where prices are overvalued, may be seen from now on. Volatile and sensitive trading is likely to continue at least until mid-March," he said.

Chinese share prices closed with a fall of 2.91 per cent on Thursday as jittery investors sold blue-chip holdings.