MSCI's gauge of stocks across the globe shed 0.14%, as the pan-European STOXX 600 index lost 0.95%. Wall Street's main indexes were mixed in afternoon trading a day after the S&P 500 posted its biggest drop in a month, with the S&P 500 and the Dow industrials in negative territory but the tech-heavy Nasdaq gaining.
"The factors that helped drive the selloff yesterday - COVID trends and the election uncertainty - are likely going to persist this week," said Keith Lerner, chief market strategist at Truist/SunTrust Advisory.
"It's a bit of a low conviction tug-of-war until we move past the election and see what the impact of these COVID numbers rising are."
The United States, Russia, France and other countries have registered record numbers of infections in recent days, and European governments moved to set new curbs in motion to try to rein in a fast-growing surge of cases.
Ahead of the Nov. 3 U.S. presidential election, former Vice President Joe Biden leads President Donald Trump in national opinion polls. But the race is close in key battleground states that could decide the outcome, and investors had pointed to a tightening of the election as a factor in Monday's volatility.
On Wall Street, the Dow Jones Industrial Average fell 143.36 points, or 0.52%, to 27,542.02 the S&P 500 lost 3.04 points, or 0.09%, to 3,397.93 while the Nasdaq Composite added 67.26 points, or 0.59%, to 11,426.20.
Investors also focused on a busy week of corporate earnings. Caterpillar shares fell 3.7% and 3M dropped 1.8% after the two industrial companies' respective earnings reports.
In foreign exchange markets, the dollar index, which measures the greenback against a basket of currencies, fell 0.272%, with the euro up 0.17% to $1.1828.
U.S. Treasury yields fell and the yield curve was flatter as hopes faded for a stimulus deal in Washington to arrive soon. Euro zone bond yields also dipped.
"The market wants some sort of stimulus. It's not getting it yet," said Eric Jussaume, director of fixed income for Cambridge Trust.
Benchmark U.S. 10-year notes last rose 7/32 in price to yield 0.7793%, from 0.803% late on Monday.
Crude rebounded as companies shut down some U.S. Gulf of Mexico oil production ahead of an approaching storm, although surging coronavirus infections and rising Libyan supply limited gains.
U.S. crude last rose 2.28% to $39.44 per barrel and Brent was at $41.15, up 1.71% on the day.
(Additional reporting by Ross Kerber in Boston, Elizabeth Howcroft in London; Editing by Bernadette Baum)
By Lewis Krauskopf