World stocks and oil slipped on Tuesday as concerns about the prospect for an economic recovery pushed key equity indexes into negative territory for the year.

However, European stocks recouped some losses and Wall Street was set for a firmer open after U.S. stocks suffered their worst one-day loss in two months on Monday.

The S&P 500 index is back into negative territory for the year and the pan-European FTSEurofirst 300 index also briefly fell below its 2008 close level.

Data highlighted the fragile state of Europe's economy: French consumer spending fell unexpectedly last month, and a recovery stalled in the euro zone's dominant service sector with an unexpected fall in the region's services purchasing managers index.

Euro zone manufacturers fared better, with that sector's PMI rising to its highest level since September.

"What we will see as this week moves on are more sideways moves. Sideways momentum and stagnation are showing themselves right now," said Howard Wheeldon, strategist at BCG Partners. MSCI world equity index was down 0.4 percent, having hit a one-month low earlier. World stocks are up just 4 percent this year.

The FTSEurofirst 300 index was down 0.1 percent on the day, trimming earlier losses. U.S. stock futures were up 0.4 percent , pointing to a firmer open on Wall Street.

Defensive sectors, such as utilities and health care, were among the major gainers in Europe, reflecting investor preference for gradually increasing equity exposure after being underweight for the past year or so.

Emerging stocks lost 1.8 percent.

U.S. crude oil fell 0.5 percent to $67.15 a barrel.

"The stock markets and global economic outlook pushed oil through key support levels but they now seem to be finding support," said Christopher Bellew, a broker at Bache Commodities.

The September Bund future was down 21 ticks.

RISK CUT BACK

The low-yielding yen, which benefits from increased risk aversion, rose 0.5 percent to 95.54 per dollar, having hit a three-week high earlier.

The dollar fell 0.5 percent against a basket of major currencies ahead of the Federal Reserve's monetary policy decision after a two-day meeting on Wednesday.

Investors expect the Fed to keep interest rates near zero while they are split on whether the Fed will expand its existing $300 billion plan to purchase Treasuries.

"At this early and fragile stage in what appears an improving backdrop, the Fed would not want to be blamed for giving false hope by being a cheerleader at this point," RBC Capital Markets said in a note to clients.

"Seeing as they have run through about half their current allotment of ammunition for Treasury purchases, and at the current pace they would use it all up by around late August, this would certainly seem like a good opportunity to address their future intentions."

Moody's Investors Services said the United States' triple-A ratings could come under threat if Washington was unable to bring public debt back to a downward trajectory and/or if the dollar were severely challenged as the main international reserve currency.