LONDON: European markets slid Wednesday after sharp losses earlier in Asia and overnight on Wall Street, as concern grew over the US economic outlook, dealers said.
Stocks dived as investors were also bombarded by a "perfect storm" of problems from trade to Brexit that erased the positive start to the week when sharp gains were made after the US and China appeared ready to dial down their trade war, reports AFP.London sank 1.2 percent as traders also weighed fresh trouble for the pound on Brexit strains.
"European stock markets are firmly in the red following the major losses incurred on Wall Street," said CMC Markets analyst David Madden. "From a political and economic point of view, not much has changed, but investor confidence has been shaken in light of the move in the US yesterday, and that is playing on investors' minds." Wall Street was pummelled Tuesday by worries over slowing US growth and trade conflict with China.
The glum mood overshadowed hints from President Donald Trump at more time to resolve the China-US trade row, as well as soothing comments from China about its wish to press ahead with a weekend agreement between the world's top economies.
Trading floors were awash with uncertainty over the agreement Trump hammered out with his Chinese counterpart Xi Jinping to much fanfare -- and an initial markets rally -- in Buenos Aires.
While Trump hailed the deal at first, on Tuesday he warned on Twitter "remember, I am a Tariff Man", adding: "When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so".
Then, in another tweet he left open the door to an extension of the agreement's 90-day timeline to end the row.China's commerce ministry Wednesday called the pact "successful" and said it "will start with the implementation of the specific matters in which consensus has been reached, the sooner the better."
It did not provide further details.
Concerns are also mounting about the US economy as short-term and long-term money market rates moved closer together, stoking fears of "inversion."
If the process continues and short-term rates overtake long-term, it is often taken as a clear precursor to a recession.
As a result Tuesday, the Dow dived 3.1 percent, the S&P 500 tanked 3.2 percent and the Nasdaq plunged 3.8 percent.
In Asia, Hong Kong stocks plunged 1.6 percent, Shanghai ended 0.6 percent lower and Tokyo was down 0.5 percent.
The pound continued to struggle on concerns Britain could leave the EU without a deal, which most observers fear could hammer the economy.
Sterling had briefly hit a 17-month-low at $1.2659 after Prime Minister Theresa May suffered a series of stunning defeats in parliament that highlighted the fight she has in passing her Brexit deal.
If she loses there are expectations she will face a no-confidence vote and a defeat that could force early elections, leaving the country in chaos.
"May's triple defeats in parliament are highly discouraging and may intensify fears over her Brexit deal being rejected next week," said FXTM analyst Lukman Otunuga.
Separately, oil prices extended losses after another jump in US inventories and as Saudi Arabia raised questions about the chances of an output cut at a meeting of OPEC and non-OPEC members this week.
Saudi Energy Minister Khalid Al-Falih said it was "premature to say what will happen" in Vienna, days after Russian President Vladimir Putin had said the pair had agreed to maintain a production cap.