Global markets were caught in a wave of panic selling as investors considered the mounting risks of a worldwide recession.

The trigger for the latest sell-off was a set of weak private sector job figures in the United States.

On Wall Street, the industrial-skewed Dow Jones index shed 494 points, or 1.9 per cent, to close at 26,079 overnight.

In two days, the Dow had plummeted by 838 points, wiping out all its gains from the September quarter.

The benchmark S&P 500 and tech-heavy Nasdaq indices lost 1.8 and 1.6 per cent respectively.

Market snapshot at 7:45am (AEST): ASX SPI futures -1.8pc at 6,493, ASX 200 (Wednesday's close) -1.5pc at 6,640

ASX SPI futures -1.8pc at 6,493, ASX 200 (Wednesday's close) -1.5pc at 6,640 AUD: 67.05 US cents, 54.5 British pence, 61.16 euro cents, 71.84 Japanese yen, $NZ1.07

AUD: 67.05 US cents, 54.5 British pence, 61.16 euro cents, 71.84 Japanese yen, $NZ1.07 US: Dow Jones -1.9pc at 26,079, S&P 500 -1.8pc at 2,888, Nasdaq -1.6pc at 7,785

US: Dow Jones -1.9pc at 26,079, S&P 500 -1.8pc at 2,888, Nasdaq -1.6pc at 7,785 Europe: FTSE 100 -3.2pc at 7,122, DAX -2.8pc at 11,925, CAC -3.1pc at 5,423, Euro Stoxx 50 -3c at 3,413

Europe: FTSE 100 -3.2pc at 7,122, DAX -2.8pc at 11,925, CAC -3.1pc at 5,423, Euro Stoxx 50 -3c at 3,413 Commodities: Brent crude -2.3pc at $US57.56/barrel, spot gold +1.5pc at $US1,499.24/ounce, iron ore flat at $US93.38/tonne

"The weakening conditions in Europe and the slowdown in China it's all adding up to the same thing — essentially, worries that the global economy is slowing and giving investors reason to pause and take profits," said Robert Pavlik, chief investment strategist manager at SlateStone Wealth.

For the first time in about a month, the Dow and S&P have slipped below their 100-day moving averages.

Many investors believe that falling below such moving averages means the indices are likely to fall further.

However, European markets were hit even harder, with London's FTSE plunging 3.2 per cent and Germany's DAX down 2.8 per cent.

US economy begins to falter

US payrolls growth in August was weaker than expected — the initial number of new jobs being created (195,000) was sharply revised down to 157,000, according to the ADP National Employment Report.

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In addition, 135,000 new jobs were created in September, which fell below market expectations of 140,0000.

ADP said that "businesses have turned more cautious in their hiring," with small enterprises becoming "especially hesitant".

That added to fears sparked on Tuesday, when the US recorded its worst manufacturing result in more than 10 years.

The recent set of weak data has shaken investors' faith in the US economy, which had shown relative strength despite slowing economic growth around the world.

"If China buys less from us [the United States], we have less to manufacture, fewer orders to fill," said Sam Stovall, chief investment strategist at CFRA Research.

"This data is indicating we are not immune to this trade dispute, that it's hurting us as well as China."

US widens trade dispute with Europe

Adding to trade concerns, the United States has won approval from the World Trade Organisation (WTO) to levy import tariffs on $US7.5 billion ($11.2 billion) worth of European goods.

Market analysts fear this could trigger a tit-for-tat trade war between the US and European Union.

The US was involved in a 15-year dispute, alleging that the EU provided illegal subsidies to Airbus — to give it an unfair competitive advantage over US airline Boeing.

WTO arbitrators said Boeing had lost the equivalent to $US7.5 billion a year in sales and disruption to its aircraft deliveries because of cheap European government loans to Airbus.

Airbus shares fell 2 per cent following the WTO's decision to side with the US.

The United States said, from October 18, it would enact 10 per cent tariffs on European-made Airbus planes and 25 per cent duties on French wine, Scotch and Irish whiskies and cheese from across the continent.

Meanwhile, spot gold jumped 1.4 per cent to $1,499.31 an ounce as investors shifted away from the risk of stock markets and towards safe-haven assets.

Weak economic data continued to weigh on oil prices, with Brent crude falling 2.4 per cent to $US57.48 a barrel.

ABC/Reuters