U.S. stocks sold off sharply on Wednesday as a brief rally in beaten-down oil prices stalled after U.S. data added to concerns about an oversupplied energy market.
Major U.S. stock indexes were all off at least 2 percent, with the Nasdaq down more than 3 percent. The pan-European FTSEurofirst 300 index closed up 0.4 percent, well off its highs.
Benchmark Brent crude slipped below $30 a barrel, a day after U.S. oil prices breached that level.
Volatility in oil prices overshadowed better-than-feared trade data out of China that initially lifted sentiment in equities and commodities.
Benchmark 10-year U.S. Treasury note yields fell to their lowest levels since late October as investors piled into safe-haven government debt.
Related: lowering oil prices
The deepening slide in oil prices and concerns about China's economy have rattled equity markets, which have failed to sustain any significant rallies in early 2016.
"There is a fear that the global economy and the U.S. economy as well could lapse into a recession given the fall in energy prices and greater economic weakness overseas," said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York.
The Dow Jones industrial average fell 338.85 points, or 2.05 percent, at 16,177.37, the S&P 500 was down 45.81 points, or 2.36 percent, at 1,892.87 and the Nasdaq Composite lost 152.86 points, or 3.26 percent, at 4,533.06.
Investors, who have been hoping that stocks were primed to bounce because of the market's oversold conditions, are looking for confidence from the fourth-quarter earnings season set to begin in earnest later this week with major banks reporting.
Though undercut by the reversal in oil prices, European shares were helped by a rise in Dutch insurer Aegon following a business update.
MSCI's broadest gauge of stocks globally fell 0.8 percent.
Concern about a supply glut has helped drag down oil prices to around 12-year lows.
U.S. crude prices settled up 0.1 percent at $30.48 a barrel, paring earlier gains. Benchmark Brent settled down 1.8 percent at $30.31 a barrel, after falling to $29.96.
Data showing crude inventories rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline and over 6 million in distillates, which includes diesel and heating oil.
"Overall, it's a bearish report. I think today's inventory report is all about products ... The long-awaited massive decline in crude production is not starting again," said Dominic Chirichella, senior partner at Energy Management Institute in New York.
Investors had seen some encouraging signs in data out of China. Exports from the country fell 1.4 percent from a year earlier, data from the General Administration of Customs showed. That was better than a Reuters poll forecast an 8-percent drop and moderated from November's 6.8-percent decline.
Benchmark 10-year U.S. Treasury notes rose 11/32 in price to yield 2.0629 percent, from 2.1 percent late on Tuesday.
The U.S. dollar edged down 0.05 percent against a basket of currencies, set to break a three-day winning streak. The euro rose 0.2 percent against the dollar.
Spot gold was up 0.7 percent, after three sessions of declines.