The market tone has been largely set by Wall Street since Friday as many investors became worried that the valuations of technology, Internet and biotech stocks had gone too high. The onset of the latest quarterly corporate results season has helped focus minds in that regard. Aluminum company Alcoa kicks off the earnings season after the markets close Tuesday.
"The surprise is that it's taken investors so long to catch onto the fact that a lot of high growth stocks are trading on stupidly high valuations as companies like Twitter, Facebook, Pandora and Zynga continue to get pummeled," said Michael Hewson, chief market analyst at CMC Markets.
In Europe, the FTSE 100 index of leading British shares was down 0.6 percent at 6,571 while Germany's DAX fell 0.6 percent to 9,450. The CAC-40 in France was 0.6 percent lower at 4,411.
Wall Street was poised for a steadier opening, with Dow futures and the broader S&P 500 futures down 0.1 percent. Nasdaq futures were pointing to a 0.1 percent advance following its 1.2 percent fall on Monday. Following three straight retreats, the Nasdaq has now fallen nearly 5 percent and is below its 100-day moving average - a development that could prompt further selling in the sessions ahead.
Kathleen Brooks, research director at Forex.com, said the Nasdaq's key support level after yesterday's close at 4,079 could be the Feb. 5 low of 3,968.
"If it manages to stay above this level then the sell-off may only be a short term adjustment as investors wait for earnings season before making their next move," she said. "The risk is a disappointment this earnings season that leads to a deeper sell off."
Investors are also keeping a close watch on developments in eastern Ukraine. On Monday, pro-Russian separatists seized a provincial administration building in the eastern Ukrainian city of Donetsk and proclaimed the region independent - an echo of events prior to Russia's annexation of Crimea. Though Ukrainian authorities say they are driving them out, tensions remain.
Those geopolitical tensions are evident in the currency markets where the yen, as is often the case, advances during times of concern. The dollar was down 0.5 percent at 102.58 yen. The yen's appreciation contributed to a hefty 1.4 percent fall in Tokyo's Nikkei 225 index to 14,606.88.
The decision by Japan's central bank to leave its policy unchanged also weighed on sentiment as some traders had been hoping for more stimulus in the wake of a the rise in the sales tax hike from 5 percent to 8 percent.
Elsewhere, following a public holiday, China's Shanghai Composite Index added 1.9 percent to 2,098.28. Hong Kong's Hang Seng gained 1 percent to 22,596.97. Seoul's Kospi added 0.2 percent to 1,993.03.