U.S. stock index futures indicated a sharply lower open on Thursday after China news overnight added to concerns about global economic growth. Oil continued to slide, with U.S. crude hitting a 12-year low.
Dow futures were off about 320 points after earlier falling nearly 450 points, as of 9:11 a.m., ET.
Overnight, the People's Bank of China (PBOC) set the yuan reference rate at 6.564, its lowest since 2011 and the largest daily change since Aug. 13, according to Reuters. Trading in China was suspended for the second time in a week after a 7 percent stock drop triggered a circuit breaker, with Chinese markets open for less than half an hour in total.
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"Since we have not had much additional new data except for the PMI, I think China's reaction is more psychological rather than justified by economics," Tai Hui, chief market strategist, Asia, JP Morgan Funds, said in an email.
"For global reaction, I think market's concerns over the health of China similar to the summer of last year is playing out again," he said. "The lack of news from central banks, or economy, or corporate earnings in the first week of the year left traders with few things to focus on except for the troubles in China."
In the last week, a second sub-50 read on U.S. manufacturing ISM added to concerns about a slowdown in China's economy.
The headline Caixin China General Services PMI for December was 50.2, down 1 point from November and the lowest in 17 months, Markit said Wednesday. A few days earlier, the official China services PMI report showed a slight rise to 54.4 in December.
The Shanghai composite closed 7.32 percent lower, with the Shenzhen composite closing 8.11 percent lower. In Japan, the Nikkei finished 2.33 percent lower.
In Europe, stocks also joined the global sell off amid the turmoil in China's stock market. The pan-European Stoxx 600 index was around 3.25 percent lower on Thursday morning.
As well as concerns over China — which continues to spook markets — oil has also become a pain trade, with an elusive market bottom.
U.S. crude hit a 12-year low and continued to hold just above those levels, off more than 3 percent near $32.90 a barrel as of 8:16 a.m., ET. Brent crude was also off more than 3 percent, struggling to hold $33 a barrel.
In a light day of U.S. economic news, weekly jobless claims came in at 277,000. The December employment report is due Friday morning.
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Treasury yields held near earlier lows. The U.S. dollar index held about half a percent lower against major world currencies.
On the earnings front Bed Bath & Beyond, Ruby Tuesday and Helen of Troy are among the companies due to report after the bell.
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— CNBC's Patti Domm contributed to this report