World shares slid along with oil prices overnight, while investor Bill Gross warned investors that the good times are over.

In afternoon trading in New York, the Dow Jones Industrial Average fell 1.18 per cent, the Standard & Poor's 500 Index declined 1.16 per cent, while the Nasdaq Composite Index dropped 1.50 per cent.

Slides in shares of JPMorgan Chase and those of American Express, down 3.2 per cent and 2.5 per cent respectively, led the Dow lower.

"At this point it's going to get hard to bottom out this market until you've bottomed oil," Jim Paulsen, chief investment strategist at Wells Capital Management, told Bloomberg News. "It's really got people spooked. I do think oil will bottom and the dollar will peak and it'll get us away from this mini-panic."

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Oil continued its decline, pushing US crude futures as low as US$47.74.

"I think the likelihood of seeing US$46 to US$45 is quite likely," Phillip Streible, senior market strategist at RJO Futures in Chicago, told Reuters. "People, I think, are further understanding that the US is becoming a powerhouse in creating crude oil and that's not going to change anytime soon."

Bill Gross, meanwhile, warned investors that "the good times are over." He made the comments in an outlook posted on the Janus Capital Group website on Tuesday.

"Beware the Ides of March, or the Ides of any month in 2015 for that matter," Gross said. "When the year is done, there will be minus signs in front of returns for many asset classes. The good times are over."

"Be cautious and content with low positive returns in 2015," according to Gross. "The time for risk taking has passed."

In the latest US economic data, a report showed the Institute for Supply Management's non-manufacturing index dropped to 56.2 in December, the lowest level in six months, down from 59.3 in November.

"The December reading represents a settling back to more sustainable levels, rather than a sign that the economy is beginning to buckle," Michelle Girard, chief economist at RBS in Stamford, Connecticut, told Reuters.

In Europe, the Stoxx 600 Index finished the session with a 0.7 per cent slide from the previous close, as did France's CAC 40 Index. The UK's FTSE 100 Index fell 0.8 per cent. Germany's DAX Index slipped 0.04 per cent.

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The final reading on the Markit euro-zone PMI composite output index came in at 51.4 for December, down from an earlier reading of 51.7 and up from 51.1 in November, according to Markit Economics.

While further confirmation of the flagging euro-zone economy might underpin the need for the European Central Bank to start a quantitative easing program, the slump in oil prices might postpone the need for such stimulus.

"The weakness of the PMI in December will add to calls for more aggressive central bank stimulus, including full-scale quantitative easing, to be undertaken as soon as possible," Chris Williamson, chief economist at Markit said in a statement.

"However, with lower oil prices set to reduce businesses' costs and boost consumer spending, the outlook has brightened, and policymakers may choose to wait and see if the rate of growth continues to pick up before making firm decisions on whether such controversial steps need to be taken."