Stocks on Wall Street and in Europe cut their losses after signs that Greece would receive its latest bailout package despite a political impasse.
The latest efforts to form a government have failed and investors remain concerned about the future of other eurozone peripheral countries.
In Spain, the IBEX 35 skidded 2.8% to the lowest level seen since 2003 and the yield on 10-year government bonds rose to a new peak this year above 6%.
On Wall Street, the Dow Jones Industrial Average was down 96.88 points, or 0.7%, to 12,835.21 at the close (8am NZ time). Earlier it was down 184 points.
The losses added to a five-day slide that has already shaved 347 points, or 2.6%, off the index.
On Tuesday, the Dow took a similar intraday trajectory, losing as many as 198 points before recovering to end down 76 points.
The latest losing streak is the Dow's longest since early August.
Leading the US stock declines were healthcare and industrial stocks. Among Dow components, United Technologies was down 2.3%, GE down1.8% and JP Morgan Chase down1.4%.
The S&P 500 index was down 0.7% to 1354.58 and the Nasdaq Composite was down 0.4% at 2934.71. Both sustained sharp earlier declines before bouncing back.
Other markets: Europe, Asia fall
The Stoxx Europe 600 finished down 0.3% to 249.73, its lowest close in nearly four months. Earlier, it had fallen as much as 1.4%.
France's CAC-40 index eased 0.2% to 3118.65, while the DAX 30 index rose 0.5% to 6475.31 and the FTSE 100 index shed 0.4% to 5530.05.
Asian markets slid on fresh worries about the fragility of the eurozone.
Japan's Nikkei touched its lowest in almost three months, closing 1.5% lower at 9045.06, and Australia's S&PASX 200 hit a four-week low, closing down 0.9% to 4275.1.
Korea's Kospi slipped 0.9% to 1950.29, Hong Kong's Hang Seng Index was down 0.8% to 20330.64, and the China Shanghai SE Composite fell 1.7% to 2408.59.
Commodities: Oil, gold down
Crude-oil futures pared losses after a weekly government inventories report showed an increase that was less drastic than an earlier report had indicated.
Crude for June delivery declined $US1.05, or 1%, to $US95.98 a barrel in New York.
Gold futures fell to their lowest settlement price of 2012,.
The most actively traded gold contract, for June delivery, fell $US10.30, or 0.6%, to settle at $US1594.20 an ounce in New York, the lowest settlement price since December 30.
Currencies: Euro falls
The euro was shaken by political turmoil in the euro zone and the failure of the Greek election to produce a government.
Eurozone officials are debating delaying a €5.2 billion payment to Greece while Germany, Finland and others are wary of making the payment because of Greek politicians calling for the bailout to be renegotiated.
That news sent the euro down to $US1.2912 before it recovered to $US1.2955, down from $1.3007 late on Tuesday.
The US dollar slipped to ¥79.65 from ¥79.87. The pound bought $1.62310, down from $1.6160, and the dollar fetched 0.9270 Swiss franc, up from 0.9235 franc.