Financial and commodities markets slumped on Wednesday after the World Bank cut its growth forecasts for 2015 and 2016, fuelling fears that the benefits of cheaper oil may be offset by anaemic economies and the threat of deflation.

Share prices, commodities and lower-rated bonds fell as investors sought safety in core government bonds and currencies like the Japanese yen. The dollar dropped 1 percent against the yen.

Market jitters were slightly soothed after a top adviser to the European Union's highest court advised judges to approve a bond-buying plan by the European Central Bank aimed at boosting the struggling euro-zone economy.

But investor caution was rampant - German Bund yields fell close to a record low of 0.4 percent. U.S. 10-year T-note yields hit their lowest since May 2013.

Oil and metals prices also extended their slide. Copper traded at its lowest in more than half a decade amid a broader commodities rout that dragged down mining stocks Antofagasta, Glencore and Anglo American down 7.6 to 11.3 percent.

"These growth fears are keeping markets busy, and it is linked with the deflation question," said Christian Gattiker, chief strategist and head of research at Bank Julius Baer. "We do have the stress in financial market because it's about the solvency and liquidity of oil producers."

Weak oil prices pushed explorer Premier Oil to say on Wednesday it expected to book a $300 million impairment charge on some of its assets for 2014 due to weak oil prices.

Emerging-market equities underperformed as the Russian rouble fell 1.8 percent to the dollar. Russian stocks extended their losses on the back of the commodities sell-off and a flare-up of violence in eastern Ukraine.

In Asia-Pacific, Australia's main index fell 1.0 percent, with mining shares taking an added blow.

Seeking to support growth, Japanese Prime Minister Shinzo Abe's cabinet approved a record $812 billion budget while cutting new borrowing for a third straight year.

The share market seemed underwhelmed, however, and the Nikkei .N225 lost 1.7 percent.