Global stocks and copper prices fell from recent highs on Thursday after weak data from China reinforced concerns about the global economy, while the euro fell on worries over the European debt crisis.
The European Central bank warned about the effect of bondholder write-downs, and investor unease on the effectiveness of current measures to prevent the spread of the euro zone debt crisis was evidenced by a rise in the yields on Italian bonds.
The ECB was forced back into bond purchases in a jittery Italian bond market.
Major stock markets in recent days had jumped sharply on hopes the debt crisis was close to being resolved.
Shares of JPMorgan Chase & Co. slumped 5.7 percent to $31.31 after the bank reported a drop in quarterly earnings. JPMorgan was the first major U.S. bank to report its quarterly results.
Prices of German Bund and U.S. Treasury debt rose as investors sought relative safety.
U.S. and European shares fell from multi-week highs after China reported its trade surplus narrowed for a second straight month in September. Both imports and exports were lower than expected.
The data reflected global economic softness, which along with the euro zone debt crisis drove equities and commodities to post heavy losses in the third quarter.
On Wall Street, an index of U.S. bank shares slid 4.3 percent.
JPMorgan is a good indicator of what is happening in the banking industry and a little bit of an insight into where consumer banking is headed. said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
In midday trading in New York, the Dow Jones industrial average was down 101.34 points, or 0.88 percent, at 11,417.51. The S&P 500 was down 12.72 points, or 1.05 percent, at 1,194.53. The Nasdaq Composite was down 5.31 points, or 0.20 percent, at 2,599.42.
The S&P 500 has run up more than 10 percent from a 2011 low hit on Oct. 4 and had notched its largest seven-day rally since March 2009 on growing optimism European leaders were making progress in tackling the region's debt problems.
World stocks as measured by MSCI were down 0.7 percent.
The soft data from China also pressured copper prices . The industrial metal, often taken as a proxy for economic growth expectations, fell 2.5 percent. China is the world's largest copper consumer, accounting for nearly 40 percent of global demand.
The euro fell broadly, pulling back from a one-month high versus the dollar after the ECB warned about the impact on the currency and the region's banks of involving bondholders in euro zone bailouts.
The single currency hit a New York session low of $1.3683, according to Reuters data. It last traded at $1.3731, down 0.4 percent on the day. The euro on Wednesday touched its highest versus the greenback since Sept. 16.
Italy sold 6.2 billion euros of debt, split across four bonds. But yields remained under pressure in the cast bond market, and the European Central Bank stepped into the secondary market after the auction, buying Italian debt to cap rising yields.
Even though the auctions went relatively smoothly, investors still remain reluctant to put money into that country because of doubts about the commitment of fiscal policy and political risk, said Nick Stamenkovic, strategist at RIA Capital Markets.
The Italian 10-year BTP yield was up to 5.822 percent from 5.738 percent late on Wednesday.
The benchmark 10-year U.S. Treasury note was up 16/32 point, with the yield at 2.155 percent.