New evidence that the U.S. economic recovery is slowing pushed investors to sell shares on Wednesday following a burst of bargain hunting the previous day.

Worries about a Europe-wide stress test for banks also played into the mood.

Sentiment was hurt by the Institute for Supply Management's reading on service sector activity on Tuesday which showed growth in June, but at its slowest pace since February, heightening concerns about sluggish economic recovery.

Along with continued worries about euro zone sovereign debt, the slowing pace of recovery, particularly in the United States, has deterred investment in riskier assets.

World stocks as measured by MSCI <.MIWD00000PUS> were down 0.6 percent having gained 1.7 percent on Tuesday. The Thomson Reuters global stock index <.TRXFLDGLPU> was down 0.4 percent.

The continuous stream of disappointing economic data recently has been feeding the markets' worries about the adequacy of underlying demand in the world when the fiscal stimulus gets withdrawn, said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

Investors are concerned about the impact of stimulus programmes running their course, governments introducing harsh spending cuts to combat burgeoning debt, and the eventual raising of interest rates.

In Europe, the FTSEurofirst 300 <.FTEU3> was down nearly 1 percent having closed up 2.6 percent on Tuesday, its biggest daily gain in about 5-1/2 weeks.

Earlier, Japan's Nikkei <.N225> ended down 0.6 percent but the index remained above a seven-month low hit on Tuesday.

EURO SLIPS

The euro slipped off a seven-week high with eyes on a European committee of bank supervisors, which is to outline on the methodology of a stress test on about 100 banks in the euro zone and other countries.

Sources told Reuters the outline would come later in the day.

Analysts said the euro was nonetheless being supported after a solid sale of Spanish syndicated debt in the previous session.

There's still an awful lot of uncertainty in Europe and the stress tests are the next big event ... If growth concerns return then Europe will be worse hit than the U.S., said Derek Halpenny, European Head of Global Currency Research at BTM-UFJ.

The euro eased 0.4 percent to $1.2571. It had risen to $1.2663 on trading platform EBS on Tuesday, the highest in about seven weeks.

The dollar was up 0.2 percent against a basket of currencies.

On euro zone debt markets, core German Bunds edged up, steadying from a steep decline in the previous session with the renewed weakness in equities providing support for safe-haven government paper.

(Additional reporting by Harpreet Bhal and Lin Noueihed, editing by Mike Peacock)

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