By Sujata Rao

Hefty U.S. losses the day before have left MSCI's all-country benchmark near one-year lows, possibly putting it on course for its worst month in six years. The index is now down 12 percent from record highs hit in January .

European shares traded higher, however, after approaching two-year lows. They took their cue from Asian markets, which managed to close flat after Chinese media reported authorities were considering allowing insurance firms to invest in equities.

"We've got to accept that in this correction we have had 'on' and 'off' days' -- a few days back, markets were buoyant on back of an announcement from China on fiscal, monetary and regulatory stimulus, then another day, there are earnings reports that are perceived by investors to be bad," said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.

"But underlying it all are half a dozen issues that are worrying investors and none of them are going away soon."

Factors that have conspired to knock markets this week include disappointing company earnings, a spat between Italy and the European Union over Italy's budget, criticism of oil power Saudi Arabia over the killing of a dissident journalist and finally, worries that world growth is losing steam.

Growth worries were highlighted by the International Monetary Fund, which recently cut forecasts, citing trade wars and capital flight from emerging markets. The latest European PMI surveys underscored that view, showing German private-sector growth at the slowest in three years.

There are also signs U.S. economic and earnings growth, fuelled partly by tax cuts, may be waning. Wall Street suffered heavy losses on Tuesday after some companies, among them industrial giant Caterpillar, maintained or cut profit forecasts.

European equity sentiment was hit by weak PMIs but bank and tech shares took the worst beating after disappointing earnings at the sickly German giant Deutsche Bank and at chipmaker STMicroelectronics.

"Many of the reports coming in are not that different to expectations, but the mood (at present) is to shoot from the hip first and ask questions later," Milligan said.

U.S. shares eventually saw some buying late on Tuesday and closed only half a percent lower. But futures for all three New York indexes signal more losses, standing 0.5 to 0.9 percent lower

That could take the S&P500 benchmark beyond Tuesday's five-month lows. Microsoft, AT&T, Visa, UPS, Ford and Whirlpool are among U.S. companies posting earnings on Wednesday.

"More bouts of mini-panic" will occur until U.S. midterm elections on Nov. 6, said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo. But "as last night's resilience by Wall Street shows, sentiment has not broken down completely."

Growth jitters weighed on oil prices, too, with Brent around $76, almost $10 a barrel off recent highs following a 4 percent slide on Tuesday. But prices were also knocked by the prospect of more supply from Saudi Arabia, which pledged to pump more crude quickly if needed. [O/R]

Saudi Arabia is also in the midst of a diplomatic storm surrounding the death of Jamal Khashoggi. Turkey dismissed the kingdom's efforts to blame the killing on rogue operatives while U.S. President Donald Trump said Riyadh staged the "worst cover-up ever."

On currencies, the euro fell 0.5 percent to the dollar, undermined by the PMI surveys that showed business growth in the single-currency area decelerated faster than expected, dragged down by waning orders.

The lacklustre growth picture narrowed the gap between German two-year and 10-year yields, flattening the yield curve -- a classic sign of growth worries.

"The flash PMI for October gives a first glimpse on where the euro zone economy is heading. And the picture is not terrific," ING economist Peter Vanden Houte said.

The dollar rebounded 0.3 percent versus a basket of currencies while sterling slipped 0.4 percent to six-week lows versus the dollar.

British Prime Minister Theresa May meets later with Conservative Party lawmakers, some of whom have discussed toppling her, disgruntled with ongoing Brexit negotiations.

(Reporting by Sujata Rao; graphic by Marc Jones; editing by Toby Chopra, Larry King)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)