Wall Street fell as concern about the intensifying tension between the West and Russia over Ukraine overshadowed better-than-expected US jobs data and American corporate earnings including from 21st Century Fox.
In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.38 percent, the Standard & Poor's 500 Index slid 0.34 percent, while the Nasdaq Composite Index retreated 0.15 percent. Investors fled into the perceived safety of US Treasuries and gold instead.
Declines in shares of UnitedHealth and those of Procter & Gamble, down 2.3 percent and 1.1 percent respectively, propelled the Dow lower.
"The uncertainty over the situation in Ukraine has overshadowed the positive economic data that we saw earlier today," John Manley, chief equity strategist at Wells Fargo Funds Management in New York, told Bloomberg News.
Indeed, the latest data underpinned the view that the US labour market continues to improve. Initial claims for unemployment benefits posted a surprise drop, sliding by 14,000 to a seasonally adjusted 289,000 for the week ended August 2, a Labor Department report showed.
The four-week average fell to 293,500, the lowest level since February 2006.
"If you have underlying fundamentals improving, you have individual companies doing well, you get some volatility as a result of macroeconomic worries, we'd view that as an opportunity to selectively buy," Greg Woodard, a strategist at Fairport, New York, at Manning & Napier, told Bloomberg News.
Shares of 21st Century Fox climbed, last up 4.7 percent, after the company posted quarterly profit that surpassed expectations after the market close on Wednesday, and Rupert Murdoch also stressed the company would not make a fresh bid for Time Warner.
In Europe, the Stoxx 600 Index finished the day with a 0.7 percent drop from the previous close. The UK's FTSE 100 Index shed 0.6 percent, Germany's DAX fell 1 percent, while France's CAC 40 slumped 1.4 percent.
European Central Bank President Mario Draghi warned that the risks surrounding the economic outlook for the euro zone "remain downside."
"In particular, heightened geopolitical risks, as well as developments in emerging market economies and global financial markets, may have the potential to affect economic conditions negatively, including through effects on energy prices and global demand for euro area products," Draghi said in a statement at the end of a meeting of ECB policy makers.
"A further downside risk relates to insufficient structural reforms in euro area countries, as well as weaker than expected domestic demand," Draghi said.
Neither the ECB nor the Bank of England, whose policymakers also met on Thursday, made any fresh policy moves.
Shares of Adidas dropped 4.3 percent after the company posted disappointing second-quarter earnings and downgraded its prediction for operating profit this year, a week after it flagged several cuts to its outlook.
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