BEIJING, China - Global stock markets tumbled Tuesday after downbeat U.S. data fueled fears the world's largest economy might be sliding back into recession.

Oil prices fell to near $94 a barrel on expectations slowing global economic growth will reduce demand for crude.

In Europe, Germany's DAX opened down 0.5 per cent. France's CAC-40 shed 0.2 per cent and London's FTSE was down 0.3 per cent. Wall Street was poised to fall. Dow futures were off 0.3 per cent at 12,001.

Japan's Nikkei 225 closed down 1.2 per cent to 9,844.59 and China's Shanghai Composite Index lost 0.9 per cent to 2,976.26. Hong Kong's Hang Seng shed 1.1 per cent to 22,421.46. Seoul, Taipei, Sydney, Singapore and Mumbai also fell.

The declines came despite an agreement by U.S. lawmakers to raise Washington's $14.3 trillion debt ceiling and followed the release Monday of a disappointing survey of American manufacturing activity. The Institute for Supply Management's index for July dropped to 50.9 from the previous month's 55.3, indicating a slowdown.

The weaker manufacturing data "certainly got a lot of people seriously considering the prospects for a double dip recession," said IG Markets strategist Ben Potter in a report.

As a result of the debt deal, "the worst thing is that Washington is just in the process of passing huge spending cuts, probably the exact opposite of what's needed," he said.

South Korea's Kospi tumbled 2.4 per cent to 2,121.27 and Taiwan's Taiex declined 1.3 per cent to 8,584.72. Australia's S&P/ASX 200 shed 1.4 per cent to 4,433.60 and Singapore's benchmark was down 1.2 per cent to 3,178.59.

Major Chinese shares fell sharply after two surveys Monday showed manufacturing weakened further in July as the government tried to cool its overheated economy.

Minmetals Development Co. and Yunnan Copper Ltd., both sensitive to demand for manufacturing and construction, lost 2.6 per cent and 2.75 per cent, respectively.

Market heavyweight PetroChina Ltd., Asia's biggest oil producer by volume, shed 1.9 per cent. Industrial & Commercial Bank of China Ltd. was off 0.9 per cent and China Eastern Airlines Ltd. declined 3.1 per cent.

Other U.S. data this week could be crucial to investor expectations, culminating Friday in monthly employment figures. The consensus is that the U.S. economy generated only 100,000 jobs in July, not be enough to reduce the unemployment rate.

U.S. and European markets opened higher Monday on relief that American lawmakers had averted a potential debt crisis but shed their gains after the release of the manufacturing index.

On Wall Street, the Dow Jones industrial average fell 1.0 per cent at 12,024.53 while the broader Standard & Poor's 500 index lost 1.1 per cent to 1,278.26.

Though a debt default appears to have been avoided, worries over U.S. finances are likely to persist and a number of analysts think the credit rating agencies may still downgrade the country's triple A rating.

In currency markets, the dollar edged up to 77.87 yen after briefly hitting a near record low of 76.27 yen on Monday. The euro fell to $1.4194 from Monday's $1.4205.

Benchmark oil for August delivery was down 69 cents to $94.20 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell 81 cents to settle at $94.89 on Monday.

In London, Brent crude was down 38 cents at $116.43 a barrel on the ICE Futures exchange.

Joe McDonald, The Associated Press