Global growth worries triggered falls in shares and commodities on Thursday after the U.S. Federal Reserve signalled a weaker outlook and Chinese data pointed to a further slowing.
The deepening euro zone debt crisis was also hitting sentiment, with Spain's borrowing costs expected to hit new highs at a debt auction, a few hours before it sheds light on the dire state of its banks and possibly makes a formal request for rescue funds to bail out the sector.
"The U.S. economy is not in good shape," said Ken Hasegawa, a commodity sales manager at Newedge Japan. "You add Europe and poor demand-supply situation, and the picture gets much worse."
After its latest meeting the Fed chose to extend its current bond-buying programme, dubbed "Operation Twist", but refrained from implementing further quantitative easing, despite lowering it growth and employment forecasts for 2012 and 2013.
MSCI's global equity index fell 0.3 percent, oil hit an 18-month low, and copper slid in response to the decision, and after data showed manufacturing activity in China shrank for an eighth straight month in June.
Europe's index of 300 top company shares, the FTSEurofirst 300, was down 0.5 percent at 1,008.78 points, although it hit its highest closing level since May 11 on Wednesday.
Against a basket of major currencies the dollar stood at 81.58, above a one-month low of 81.186 seen earlier in the week, while the euro dipped 0.2 percent to $1.2679, off a one-month peak set on Monday.
