World stocks fell toward a recent 11-month low on Monday while the euro and oil prices slipped as concerns about a global economic downturn prompted investors to sell risky assets.
Persistent worries that the sovereign debt crisis in euro zone peripheral countries may spread to bigger regional economies also kept safe-haven flows into gold, which hit another record high.
The benchmark MSCI world stocks has now fallen five weeks in a row and is on track for the worst monthly performance since October 2008, a period of global market turmoil after the collapse of Lehman Brothers.
Markets run on two emotions -- fear and greed, and we have switched to the fear emotion in recent weeks. Recession fears are major concerns for investors and we have seen a lot of economic indicators slowing quite substantially, said Keith Bowman, equity analyst at Hargreaves Lansdown.
The MSCI world equity index fell 0.7 percent. European stocks erased opening losses while emerging stocks lost 1.3 percent with losses led by Shanghai shares which hit a 13-month low.
A bigger concern is a slowdown in China's economy. We haven't reached that stage yet, but the equity market could be pricing that in, just in case, said Lee Wee-Liat, regional head of property at Samsung Securities.
U.S. crude oil fell more than 1 percent. On top of an weak economic outlook, the potential for a restart of Libyan oil flow into the market if the Gaddafi regime collapses also weighed on prices.
Bund futures rose 42 ticks.
Gold hit a third consecutive all-time high near $1,900 an ounce, after staging its biggest weekly gain in 2-1/2 years last week.
The euro fell 0.1 percent. The dollar held above a record low around 75.94 yen hit on Friday, thanks to concerns about intervention by Japanese authorities.
The U.S. currency rose 0.1 percent against a basket of major currencies.
Investors are waiting for signs of further stimulus from the Federal Reserve when bankers gather in Jackson Hole, Wyoming, late this week, one year after Chairman Ben Bernanke launched a second round of quantitative easing to revive the economy.
Additional bond purchase by the Fed could help reflate asset prices, but many view the chances of a third round of quantitative easing as limited and expect the Fed to take gradual measures to boost the economy.
(Additional reporting by Atul Prakash; Editing by Toby Chopra)