Disappointing jobs numbers from both sides of the Atlantic weighed on equities overnight, a day after they reached a four-year high on Wall Street.
In afternoon trading in New York, the Dow Jones Industrial Average slipped 0.15 per cent and the Standard & Poor's 500 Index fell 0.29 per cent. The Nasdaq Composite Index rose 0.26 per cent.
Private companies in the US added 119,000 workers in April, according to ADP Employer Services data. That number was markedly short of expectations. The median forecast of economists surveyed by Bloomberg News called for a 170,000 advance.
All eyes-and hopes-are now on Friday's Labor Department report for signs of improvement in payrolls in April. Reuters said the ADP report has sparked rumours that the world's biggest economy may have added just 125,000 to 150,000 new jobs last month. The unemployment rate is expected to remain steady at 8.2 per cent.
"What the market needs is a sign that the economy is not getting worse. Yes, the growth is slow but it's still there," Ralph Edwards, director of derivatives sales and trading at ITG in New York, told Reuters.
In Europe, the labour market is deteriorating. The euro zone's jobless rate climbed to 10.9 per cent in March, the highest level in 15 years, while unemployment in Germany-so far the region's beacon of strength-unexpectedly rose.
To make matters worse, euro zone manufacturing shrank more than initially estimated last month.
Europe's Stoxx 600 Index ended the day with a 0.4 per cent drop for the session, and the euro weakened 0.6 per cent to US$1.3158. Euro zone banks were particularly hard hit.
Concern about the economic picture in the US and Europe has made US Treasuries more appealing. Yields on the 10-year note slid two basis points to 1.92 per cent in afternoon trading in New York.
"The soft data is starting to pile up," James Collins, an interest-rate strategist in the futures group in Chicago at Citigroup Global Markets, one of 21 primary dealers that trade with the Federal Reserve, told Bloomberg. "What happened overnight in Europe is also in the background. We're skewed toward lower yields."
Among US stocks, Chesapeake shares suffered, dropping some 13 per cent as the company posted an unexpected loss and is embroiled in a scandal of corporate abuse.
On Tuesday, two weeks after Reuters reported that Chesapeake chairman and chief executive Aubrey McClendon had taken up to US$1.1 billion in loans against his stakes in Chesapeake oil and gas wells, the company stripped McClendon of the chairmanship and reiterated that it's reviewing details of the loans, according to Reuters.
McClendon will stay on as CEO.