Stock indexes worldwide tumbled for the third straight session on Tuesday on fears of slowing global growth, with particular concern around the health of the banking sector, while oil prices plunged to multi-week lows.

The European banking index ended 4 per cent lower after sinking 5.6 per cent on Monday on fears of worsening bank profitability and capital strength from sustained low interest rates.

Deutsche Bank shares fell 4.3 per cent after slumping 9.5 per cent on Monday on concerns about its ability to maintain bond payments. Shares of US banks also stumbled, with the S&P financial index last down 0.9 per cent.

Beaten-down US energy shares also fell further, with the S&P energy index last down 3.6 per cent. The decline came after US stocks had lost more than 1 per cent on Monday.

"We're starting to feel some of the knock on effects from energy and distress in those markets," said Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.

"Over the last couple of days, that's spread into the financial system. It's difficult to find a lot of momentum to the upside for any sustained period of time," he said.

The FTSEurofirst 300 index slumped but was off its lowest level since Sept. 2013, which was touched earlier in the session.

MSCI's all-country world equity index, which tracks shares in 45 nations, was last down 3.02 points, or 0.84 per cent, at 357.79.

The Dow Jones industrial average was last down 24.07 points or 0.15 per cent at 16,002.98. The S&P 500 was down 4.01 points or 0.22 per cent at 1,849.43. The Nasdaq Composite was down 19.34 points or 0.45 per cent at 4,264.42.

The FTSEurofirst 300 index settled down 1.6 per cent at 1,219.82.

Oil prices sank, with benchmark Brent crude prices falling to their lowest in two weeks and US crude prices falling below $28 a barrel to their lowest in just under three weeks. Forecasts for more growth in US crude stockpiles and weak demand forecasts contributed to the plunge.

Brent crude was last down $2.12, or 6.45 per cent at $30.76 a barrel. US crude was last down $1.30 or 4.38 per cent at $28.39 per barrel.

Yields on benchmark 10-year Treasury notes, known for their relative safety, extended Monday's declines to hit 1.682 per cent, their lowest in a year. The notes were last up 3/32 in price to yield 1.7226, from a yield of 1.735 per cent late Monday.

Gold, another safe-haven asset, rose in price and was just below the 7 1/2-month high struck the previous day.

The US dollar extended Monday's drop against the safe-haven Japanese yen, hitting its lowest against the yen since November 2014 of 114.205 yen. The concerns also caused the Mexican peso to hit an all-time low against the dollar.

"Markets were very risk-averse out of the gate this week, and it's continued today," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.

Spot gold prices were last up $4.75, or 0.40 per cent, at $1,195.51 an ounce.

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