In London, ICE Brent futures traded down 31 cents at $75.96 a barrel.

The dollar fell as the US Federal Reserve issued a less optimistic outlook on economic growth on Wednesday and the euro slipped on renewed worries about Greece's sovereign debt.

Further pressure came after Genscape reported inventories at the key Cushing, Oklahoma crude oil hub rose by 240,000 barrels in the week to June 22.

Traders were also factoring in storm worries after the US National Hurricane Center said on Thursday that a tropical wave over the Caribbean Sea had about a 40 percent chance of developing into a

tropical depression over the next couple of days.

World stock markets and high-yielding currencies dropped on Thursday as investors retreated from riskier assets, worried about tepid global growth and renewed fears in Greek debt markets.

US Treasuries and gold prices rose as investors sought safe havens.

Investors also braced for legislators to wrap up negotiations on the financial overhaul bill. The Dow Jones Industrial Average was down 104.22 points, or 1.01 percent, at 10,194.22, with financials among the worst performers.

Adding to the worry list, concerns over Greece were weighing in the euro zone, as the cost of protecting its government debt against default hit a record high.

Five-year credit default swaps, or CDS, on Greek government debt climbed to a record 1,085 basis points from 934.2 basis points at the New York close on Wednesday. It now costs 1.085 million euros to insure an exposure of 10 million euros of Greek government bonds, up from 934,200 euros.

In Europe, the FTSEurofirst 300 index of top shares fell 1.89 percent at 1,020.43 points — the lowest close since June 11. Banks were the hardest hit, with the STOXX Europe 600 banking index falling 3.2 percent. Barclays, Lloyds, BNP Paribas and Societe Generale fell 4.1 percent to 5 percent.

World stocks measured by MSCI All-Country World Index were down for a third consecutive day, off over 2.20 percent on Thursday.

Meanwhile, the benchmark Standard & Poor's 500 Index was down 15.31 points, or 1.40 percent, at 1,076.73. The Nasdaq Composite Index was down 29.25 points, or 1.30 percent, at 2,224.98.

The distaste for risk on Thursday was evident in higher-yielding currencies. The Australian dollar fell as much as 1 percent on the day versus the US dollar, to a one-week low of $0.8640. It was also down 1.7 percent on the day against the yen at 77.15 yen, its lowest since June 11 as equity markets traded with broad losses.

In midday New York trading, the Australian dollar stood at $0.8690.

For its part, the dollar was down against a basket of major trading-partner currencies, with the US Dollar Index down 0.22 percent at 85.556 from a previous session close of 85.741.

The euro was up 0.49 percent at $1.2373 from a previous session close of $1.2313 as investors sold some dollars a day after the Fed's less optimistic outlook.

Against the Japanese yen, the dollar was down 0.52 percent at 89.36 from a previous session close of 89.830.