Global equity benchmarks slipped and US government bonds rallied on Thursday as a rebound in US technology stocks stalled after the European Central Bank left its stimulus programme unchanged and a stimulus bill failed in the US Senate.

MSCI's gauge of stocks across the globe shed 1.06 per cent following modest declines in Europe and gains in Asia.

On Wall Street, the Dow Jones Industrial Average fell 406.02 points, or 1.45 per cent, to 27,534.45, the S&P 500 lost 60 points, or 1.77 per cent, to 3,338.96 and the Nasdaq Composite dropped 221.97 points, or 1.99 per cent, to 10,919.59.

The ECB's decision not to ramp up its stimulus programme bolstered the euro, which has gained more than 8 per cent against the dollar since the spring and more than 4 per cent against a basket of currencies weighted by the bloc's foreign trade.

The dollar index rose 0.159 per cent, with the euro up 0.1 per cent to $1.1814.

Economists said the ECB will likely have to take more action to support its economy, possibly in December.

“But by resisting calls to cut interest rates deeper into negative territory, the bank has consolidated the appeal of the euro to global investors. It is now walking a tightrope of currency appreciation, as it dare not let the euro rise too high for fear of hampering the recovery of export-dependent economies like Germany,” said Ulas Akincilar, head of trading at the online broker Infinox.

In the US, initial claims for state unemployment benefits came in slightly higher than expectations and totalled a seasonally adjusted 8,84,000 for the week ended September 5. That matched the number of applications received in the prior week as lay-offs and furloughs persisted across industries.

The US Senate on Thursday killed a Republican bill that would have provided around $300 billion in new coronavirus aid, as Democrats seeking far more funding prevented it from advancing. The failure of the measure left the future of any additional coronavirus aid before the November presidential election in doubt.

Mizuho Bank's head of economics and strategy in Singapore, Vishnu Varathan, said investors were grappling with whether this month's steep US tech sell-off was finished, and beyond that an increasingly uncertain US political outlook and persistent Sino-US tensions.

“It's too soon to say whether the rout is over, or whether last night's recovery is simply a pause,” ANZ analysts said in a note on Thursday, referring to Wednesday's equity rebound.

In a sign of the unsettled day in markets, safe-haven assets such as US government bonds reversed course and rallied into the US close.

Benchmark 10-year notes last rose 6/32 in price to yield 0.6837 per cent, from 0.703 per cent late on Wednesday.

Concerns about demand for fuel also put oil prices under pressure, an indication of wavering confidence in global growth.

US crude recently fell 2.37 per cent to $37.15 per barrel and Brent was at $39.79, down 2.45 per cent on the day.

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