Equities fell on both sides of the Atlantic as concern about the potential impact of intensifying tensions in Ukraine and Gaza overshadowed US second-quarter earnings.
In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.23 percent, the Standard & Poor's 500 index retreated 0.22 percent, while the Nasdaq Composite Index slipped 0.12 percent.
Declines in shares of General Electric and McDonald's, down 1.9 percent and 1.3 percent respectively, outweighed gains in shares of Intel and Microsoft, up 1 percent and 0.9 percent respectively.
Shares of McDonald's as well as those of Yum! Brands dropped amid another health food scare at one their suppliers in China. Shares of Yum! Brands were last down 3.8 percent.
"I think this is going to be really challenging for both these firms," Benjamin Cavender, Shanghai-based principal at China Market Research Group, told Reuters. "I don't know that this is something an apology can fix so easily, because at this point people don't have a whole lot of trust that they have good systems in place."
In Europe, the Stoxx 600 Index slid 0.5 percent from the previous close. The UK's FTSE 100 Index fell 0.3 percent, France's CAC 40 shed 0.7 percent, and Germany's DAX dropped 1.1 percent.
"I can't see any panic selling. It is only just that people are not willing to buy," Soeren Steinert, associate director for equities trading at Quoniam Asset Management in Frankfurt, told Bloomberg News. "There is no conviction that the market should be falling further."
In a monthly report, the Bundesbank said Germany's economy endured a tough second quarter.
"Industry shifted down a gear. As well as calendar effects, increased geopolitical tensions likely played a role in this," it said.
While the German central bank was cautious, the International Monetary Fund said it's still expecting the EU's powerhouse to expand 1.7 percent in 2015, up from an earlier 1.6 percent forecast.
US Treasuries advanced, as did German bunds, as some investors sought refuge from the uncertainty in the safety of fixed-income securities. Yields on the benchmark 10-year bond fell one basis point to 2.47 percent.
Gold also received a bid for the same reason. Spot gold gained 0.2 percent to US1,312.50.
"It's Gaza, Israel, Iraq, Ukraine ... everything that has a sort of potential flashpoints that could resurface to be keeping gold above the US$1,300 mark," Societe Generale analyst Robin Bhar told Reuters.
So far the latest quarterly US earnings season has been solid. About 76 percent of S&P 500 companies that have posted results this season have beaten analysts' estimates for profit, while 69 percent exceeded sales projections, according to data compiled by Bloomberg.
Companies scheduled to report this week include Apple, Facebook, Microsoft as well as Boeing and Caterpillar.
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