Asian stocks stumbled to three-week lows and U.S. stock futures and Treasury yields fell after China's September trade data showed a sharp decline in exports, raising fresh concerns about the health of the world's second-biggest economy.
Risky assets have had a torrid start to the final quarter of 2016 after recent outperformance as concerns around the outcome of U.S. elections, the fallout from a "hard Brexit" and a struggling German banking sector spread turmoil in markets.
A weak Asia was seen pushing down European stocks lower with Britain's FTSE, Germany's DAX and France's CAC expected to open 0.3 percent to 0.4 percent lower.
Early on Thursday, the mood soured after data showed Chinese imports in dollar terms were back in contractionary territory in September while exports dropped by a sharper-than-expected 10 percent.
The weak trade data fuelled a broader risk-off move. Some analysts said the soft data also raised concerns that China may pursue a weaker currency policy in the coming months, stoking deflationary pressures for the rest of the region at a time when corporate earnings' growth has slowed.
"The continued underwhelming performance of Chinese exports adds weight to our view that the People's Bank will maintain its recent policy of gradual trade-weighted renminbi depreciation in coming quarters," economists at Capital Economics wrote in a note.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, touching its lowest since Sept. 19. Hong Kong stocks fell 1.2 percent and Japanese shares were down 0.4 percent thanks to a stronger yen.
"The China data has exacerbated the broad cautious mood and we should see more gains for the yen and other safe-haven assets," said a currency trader at an Asian bank in Hong Kong.
Ten-year yields on U.S. Treasury debt fell five basis points to 1.74 percent, a relatively large move in the Asian timezone, before rebounding partially while U.S. futures deepened losses to be down 0.7 percent on the day.
Despite the broad pull-back in U.S. Treasury yields, markets were pricing a greater probability of a rate increase in December, even though some analysts warned that higher risk aversion may force the Fed to stand pat.
"Risk aversion is high among investors due to geopolitical risks in Europe on the horizon and we expect the Fed to remain on hold in December and expect a rate increase only next June," said Fan Cheuk Wan, head of investment strategy for Asia at HSBC Private Bank.
Wall Street struggled to find fresh momentum after breaking conclusively below a 100-day moving average this week. The Dow Jones industrial average closed up 0.09 percent, while the S&P 500 gained 0.11 percent.
The CBOE Volatility Index, the "fear gauge" of near-term investor anxiety, held around 16, indicating broader market uncertainty.
Elsewhere, sterling treaded water after British Prime Minister Theresa May's offer to give UK lawmakers a say in plans to leave the European Union.
Within Asia, the Thai baht was in focus after falling to an eight-month low in the previous session on concerns about the health of 88-year-old King Bhumibol Adulyadej. The health of the world's longest reigning monarch has "overall not yet stabilised", the palace said on Wednesday.
Oil prices struggled following a 1 percent drop overnight after the Organization of Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over the group's pledge to restrict output.
U.S. West Texas Intermediate crude slipped 0.8 percent to trade at $49.78 a barrel. Gold stabilised around the $1,260 per ounce level after falling sharply last week.