Though Beijing government figures showed that the world's second-largest economy expanded 7.7 per cent in the first quarter of the year compared with a year earlier, the figure was down on the previous period's 7.9 per cent rate and was worse than expectations for a modest increase to 8 per cent.
The report stoked worries about the strength of China's economy at a time when a run of U.S. economic data has disappointed and Europe remains embroiled in its crisis over too much government debt.
"Weak economic growth in China has taken investors by surprise," said Mike McCudden, head of derivatives at stockbroker Interactive Investor. "With the recent run or weaker global economic data investors have reached an impasse and without a great deal in sight this week to inspire them, we should see markets drift lower."
In Europe, the FTSE 100 index of leading British shares was down 1.1 per cent at 6,313 while Germany's DAX fell 1 per cent to 7,678. The CAC-40 in France was also 1 per cent lower at 3,692.
Wall Street was poised for a lower opening, with Dow futures down 0.3 per cent and the broader S&P 500 futures 0.5 per cent lower. The focus during the U.S. session will be on the next batch of quarterly corporate earnings statements from financial companies, including Citigroup, Charles Schwab and First Republic Bank.
Much of the interest in financial markets though is centred on gold, which has taken a battering over recent sessions.
By late-morning London time, an ounce of the yellow metal was trading $100.10, or 6.7 per cent, lower at $1,401.50. Gold has fallen sharply over recent trading sessions from over $1,600 10 days ago and there is talk in the markets that a number of institutions are cashing in following a reduction in gold price predictions from leading investment banks, including Goldman Sachs. Earlier, it fell to $1,398.80, its first foray below $1,400 since March, 2011.
Many reasons have been put forward to explain the sudden change of course, including speculation that Cyprus may sell a chunk of its reserves to finance its part of its financial rescue. Though that may not materialize, it was enough to prompt some investors to think that a gold-selling strategy may be used elsewhere in the troubled eurozone.
Another reason put forward is that the Federal Reserve will outline a strategy to withdraw its monetary stimulus later this year despite recent mixed signals out of the U.S. economy, the world's largest. One of the reasons why the price of gold has been so well-bid in recent years is a direct result of the Fed's policy — the new dollars created under so-called quantitative easing have found themselves recycled in financial markets and many of them have gone to the perceived haven of gold.
"Investors are clearly turning away from gold here, using the price action as justification for unwinding positions and taking capital away from what was once considered as almost a one-way bet," said David White, a trader at Spreadex. "Even those naturally contrarian are struggling to find reasons to own gold."
The sharp decline in the price of gold has had knock-on effects throughout commodity markets. The price of oil has been in retreat too and the benchmark New York rate was down another $2.70 at $88.59 a barrel.
Subdued investor appetite for risk, as evidenced by the performance of stocks, was evident in the currency markets too, where the euro was trading 0.4 per cent lower at $1.3057.
Earlier in Asia, Japan's Nikkei 225 finished 1.6 per cent lower at 13,275.66, falling for a second straight trading day after a series of gains. The Bank of Japan's aggressive monetary easing to lift borrowing and spending drove Japanese stocks to their highest close in nearly four years last week as well as weighing heavily on the yen. However, the yen has gained some ground over the last couple of sessions, and the dollar was 0.4 per cent lower at $97.77 yen.
Hong Kong's Hang Seng sank 1.4 per cent to 21,772.67 while Australia's S&P/ASX 200 declined 0.9 per cent to 4,967.90 and China's Shanghai Composite Index shed 1.1 per cent to 2,181.94.
South Korea's benchmark index narrowed its losses amid expectations that policymakers in major economies may put pressure on Japan to halt the yen's slide, which has hurt South Korean exporters. The Kospi closed at 1,920.45, down 0.2 per cent.