The Fed has said it will make an initial $10 billion cut to its $85 billion of monthly bond purchases that have supported economic recovery by keeping interest rates low.

Asian and European investor sentiment was dampened after U.S. stocks had their worst day so far this year, with major Wall Street benchmarks all dropping more than 1 percent. Confidence among investors was sapped by a weak U.S. employment report last week even as some analysts blamed severe cold weather and noted that one weak month doesn’t make a trend.

After strong gains in stock markets last year, investors fear that prospects for more gains might be limited in the short-term.

Germany’s DAX slumped 1.2 percent to 9,398.20 and the FTSE 100 index of leading British companies slipped 0.8 percent to 6,704.29. France’s CAC 40 dropped 1 percent to 4,220.34.

U.S. stocks looked set for a flat open. Dow futures edged less than 0.1 percent lower to 16,207.00 while broader S&P 500 futures gained less than 0.1 percent to 1,815.70.

Asian stocks ended mostly lower, with Japan leading declines after trading there resumed following a holiday on Monday. The Nikkei 225 dived 3.1 percent to 15,422.40. Investors got their first chance since Friday to react to the U.S. jobs report as well as the movement in the yen, which has risen strongly since last week.

“Equity markets and risk assets in general are having a decidedly shaky start to the year,” Mitul Kotecha, head of global markets research for Asia at Credit Agricole CIB, said in an email. “Worries ahead of fourth quarter earnings releases and perhaps concerns about the economy in the wake of the disappointing U.S. December jobs report weighed on U.S. equities overnight.”

Andrew Sullivan, director of Asian sales trading at Kim Eng Securities, said investors are watching for earnings later on Tuesday from big U.S. companies such as J.P. Morgan and Wells Fargo.

“I think there’ll be a lot of caution. We’ve had a lot of companies pre-warn ahead of these earnings,” said Mr. Sullivan.

Markets have also been perturbed by comments from the president of the Federal Reserve’s Atlanta branch raising the prospect of ongoing reductions in economic stimulus despite the weak jobs report. Dennis Lockhart said on Monday he would support further cuts “over the course of this year” if the economy continued to improve.

The Fed has said it will make an initial $10 billion cut to its $85 billion of monthly bond purchases that have supported economic recovery by keeping interest rates low.

Japan’s Suntory Beverages & Food Ltd. rose 0.3 percent in Tokyo after parent Suntory Holdings Ltd. said it was buying American whiskey maker Beam Inc. in a $13.6 billion deal.

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