LONDON (AP) -- Worries over the Chinese banking sector weighed on markets Wednesday, a day after weak U.S. jobs data reinforced expectations that the Federal Reserve won't be reducing its monetary stimulus anytime soon.
Tuesday's news that the U.S. generated only 148,000 jobs in September, below the consensus among analysts for around 180,000, prompted stocks in Europe and the U.S. to rally. However, that momentum came to a grinding halt during the Asian trading session amid concerns over the bad loans that are being written off by China's largest banks.
"This has reignited fears over China's shadow banking system and whether the People's Bank of China will be forced to raise interest rates in order rein in it," said Craig Erlam, market analyst at Alpari. "If we do see a tightening of monetary policy, it could choke off the recovery being seen in the world's second largest economy, which in turn would impact growth globally."
In Europe, the FTSE 100 index of leading British shares fell 0.3 percent to close at 6,674.48 while Germany's DAX fell the same rate to 8,919.86. The CAC-40 in France shed 0.8 percent to 4,260.66.
In the U.S., the Dow Jones industrial average was down 0.5 percent at 15,394.73 while the broader S&P 500 index fell the same rate to 1,745.43.
A mixed bag of U.S. corporate earnings did little to alter the prevailing profit-taking mood. While Caterpillar's quarterly earnings plunged 44 percent and the company cut its outlook for the year again, Boeing's shares were well supported after beating analyst expectations.
A solid earnings season has been one reason why the S&P has hit a series of record highs, along with delayed expectations of when the Fed will begin "tapering" its stimulus.
Max Cohen, a trader at Spreadex, says earnings have beaten analyst estimates at 74 percent of the 141 companies of the S&P that have released their results so far, while 53 percent exceeded sales projections.
Elsewhere, the dollar consolidated, particularly against the euro, after falling back in the wake of the payrolls figures — the euro was flat at $1.3788, just shy of its near two-year high of $1.3793.
Earlier in Asia, China's Shanghai Composite Index fell 1.3 percent to 2,183.11 and Hong Kong's Hang Seng shed 1.4 percent to 23,999.95. Japan's Nikkei 225 tumbled 2 percent to 14,426.05 as the yen gained against the U.S. dollar, which can hurt sales and profits at Japanese exporters. Australia's S&P/ASX 200 fell 0.3 percent to 5,356.10.
Oil prices remained under pressure too, with the benchmark New York rate down $1.55 at $96.75 a barrel — near its lowest level since late June. Ample supplies, worries over the U.S. economy, and an easing of geopolitical tensions relating to Iran and Syria have weighed on oil prices in recent weeks.