European and US stocks slid on Wednesday after President Donald Trump suggested he could shut down the US government if Congress did not fund building a Mexico border wall and also threatened to pull out of a major trade agreement.
Investors also looked ahead to a meeting of central bankers that begins Thursday for insights on monetary policy.
Stocks had staged a solid rally Tuesday, in part reflecting optimism that Trump-related controversies were receding and that long-awaited tax overhauls could take center stage.
But in a speech late in the day Trump vowed to build the border wall even "if we have to close down our government" and to pull out of the NAFTA trade agreement with Canada and Mexico.
But market analyst Jasper Lawler at London Capital Group downplayed the risk of a shutdown.
"We think this is basically a bluff by Trump to get his 'Great Wall' back on the agenda and show some political rebellion following his foreign policy capitulation in Afghanistan," he said in a note to clients.
Investors were also looking ahead to getting fresh clues from US Federal Reserve boss Janet Yellen about plans to reduce its huge bond holdings, and from ECB chief Mario Draghi about its cutting back of bond purchases.
"Equity markets in Europe are marginally lower on the day as traders are in wait-and-see mode ahead of the Jackson Hole symposium that starts tomorrow," where both Yellen and Draghi are scheduled to speak, said CMC Markets UK analyst David Madden.
Paris shed 0.3 percent and Frankfurt lost 0.5 percent, while London bucked the trend to end the day flat.
The Dow lost 0.4 percent.
The euro gained against the dollar following well-received eurozone data, analysts said.
"Manufacturing and services PMIs from the eurozone, Germany and France were all very strong and well above the level that separates growth from contraction, suggesting that the recovery is continuing to gain traction," said Craig Erlam, senior market analyst at Oanda trading group.
In London, British advertising giant WPP saw its shares slump nearly 11 percent after the company cut its full-year revenue forecast. US advertising companies were also weak, with Omnicom shedding 7.0 percent and Interpublic Group 6.3 percent.
Wal-Mart Stores shed 0.1 percent and Google parent Alphabet rose 0.3 percent after the two companies announced they were teaming up in an attempt to challenge Amazon's growing dominance in online shopping through voice-activated ordering of goods on Google Express.
- Key figures around 2030 GMT -
New York - Dow: DOWN 0.4 percent at 21,812.09 (close)
New York - S&P 500: DOWN 0.4 percent at 2,444.04 (close)
New York - Nasdaq: DOWN 0.3 percent at 6,278.41 (close)
London - FTSE 100: FLAT at 7,382.65 points (close)
Frankfurt - DAX 30: DOWN 0.5 percent at 12,174.30 (close)
Paris - CAC 40: DOWN 0.3 percent at 5,115.39 (close)
EURO STOXX 50: DOWN 0.5 percent at 3,440.10
Tokyo - Nikkei 225: UP 0.3 percent at 19,434.64 (close)
Hong Kong - Hang Seng: closed
Shanghai - Composite: DOWN 0.1 percent at 3,287.71
Euro/dollar: UP at $1.1813 from $1.1764 2100 GMT
Pound/dollar: DOWN at $1.2801 from $1.2821
Dollar/yen: DOWN at 108.98 yen from 109.56 yen
Oil - Brent North Sea: UP 70 cents at $52.57 per barrel
Oil - West Texas Intermediate: UP 58 cents at $48.41 per barrel