"As we get closer to the Federal Open Market Committee meeting, the market is becoming increasingly nervous, and the reactions to economic data correspondingly more severe," Evan Lucas, a market strategist at brokerage IG Markets, said in a note.
He added that the default position for markets at the moment was "prudence and hibernation."
Wall Street rose for a third consecutive session on Tuesday after higher inflation data. The consumer price index for May rose by a larger-than-expected 0.4 percent, marking the biggest uptick in in nearly three years.
"This (inflation data) should come as a relief to the Federal Reserve Committee, as a pick-up in pricing power reflects a stronger economy," said Desmond Chua, market analyst at CMC Markets.
On Wednesday morning, news wires reported that Sunni militants had attacked Iraq's Baiji oil refinery, the largest in the country. This followed reports that Iraqi Prime Minister Nuri al-Maliki had fired four of his top security officials in the wake of the insurgency in the north of the country.
The price of Brent crude oil held above $113 on Wednesday, with the threat of supply disruptions still giving the commodity a premium.