World stocks fell to three-week lows on Thursday and commodity prices sagged after data showing China's rapid growth was losing steam added to worries about the strength of the global economic recovery.

Wall Street looked set to track Asian and European peers lower with U.S. stock index futures all in the red.

Investors, however, took heart at the outcome of the European Central Bank's offering of six-day loans, which saw banks borrow 111.2 billion euros ($136.1 billion), a figure that analysts said did not set off alarm bells.

Investors were worried that European banks are too reliant on ECB funds, especially with the expiry of 442 billion euros of one-year loans on Thursday.

There's a bit of relief in the market that some of the worries about funding concerns in Europe may be overdone, said Nick Stamenkovic, strategist at RIA Capital Markets.

Also helping to lighten the mood was Spain's successful sale of 3.5 billion euros of bonds despite Moody's warning late on Wednesday that it may cut the country's Aaa credit ratings.

MSCI's all-country world stock index .MIWD00000PUS shed 0.4 percent, having earlier fallen as much as 0.9 percent to fresh three-week lows. In the first half of 2010, it dropped some 10 percent.

The FTSEurofirst 300 .FTEU3 index of top European shares and the euro zone's blue-chip index, Euro STOXX 50 .STOXX50E were both down about 0.9 percent.

Bank stocks pared losses after the ECB tender result with the STOXX Europe 600 banking index .SX7P down 1.1 percent, having earlier fallen more than 2 percent.

Earlier, Japan's Nikkei average .N225 slid 2 percent to a seven-month closing low.

Asian growth has been the engine of the world economy so it doesn't bode well if China is losing steam, said Jacques Henry, analyst at Louis Capital Markets, in Paris.

The market had doubts about the global economy, and these numbers are confirming the doubts.

An official survey showed the pace of Chinese manufacturing activity slowed in June to the lowest since February, while HSBC's separate purchasing managers' index dropped to a 14-month low, with outright drops in output and new orders.

While China's growth had been expected to cool from a double-digit pace in the first quarter, the latest reports combined with Europe's debt crisis and persistent weakness in the U.S. housing and labor markets to spread a negative view on the global recovery.


The euro reversed earlier declines, but commodity-based currencies like the Australian dollar fell on growth worries.

The single currency rose 0.7 percent on the day against the greenback to $1.2314 and was a touch firmer against the yen at 108.16.

(Today's ECB tender) implies less desperation of euro zone banks to get spare cash, said Kit Juckes, currency strategist at Societe Generale. This is a reasonably good thing for the euro.

The Aussie dollar shed 0.4 percent to $0.8365.

Oil prices fell for a fourth consecutive day, down 1.4 percent at $74.56 a barrel, while three-month copper futures on the London Metal Exchange slid two percent to $6,389.00 a ton.

Despite the risk averse backdrop, safe-haven assets such as U.S. Treasuries struggled to make further gains with the two-year yield not far off a record low of 0.59 percent set on Wednesday.

In the euro zone, the benchmark two-year German government bond yield climbed sharply to 0.7 percent as short-term rates adjusted upwards to reflect lower money market liquidity.

(Additional reporting by Blaise Robinson, Kevin Plumberg, Naomi Tajitsu and William James; Editing by Toby Chopra)