LONDON: Fears of a trade war between the world's top two economies weighed on world stocks Wednesday.
"European equity markets are under pressure after China revealed a fresh round of tariffs," said David Madden, market analyst at CMC Markets UK.
"It would appear that gloves are off in relation to the trade war."
European stock markets were in the red after most Asian indices ended with losses.
Investors brushed off data showing that Europe's economic recovery is gaining pace, with eurozone unemployment at its lowest level since December 2008 and inflation on the rise.
Earlier on Wednesday, Tokyo and Sydney bourses managed to cling on to slim gains. "Buying remained limited as investors are still concerned about several uncertain elements, including a US-led trade war," Hikaru Sato, senior technical analyst at Daiwa Securities, told AFP.
The United States has published a list of Chinese imports worth around $50 billion that could be targeted by tariffs -- a significant escalation in the confrontation with Beijing.
China responded sharply, saying it was ready to retaliate against what it described as a "unilateralistic and protectionist" move that serves neither country's interests.
The prospect of a trade war between the US and China "continues to cast a dark shadow over global capital markets", warned Stephen Innes, an analyst at OANDA.
A volatile session Tuesday on Wall Street saw US stocks indices finish with a strong rally.
The Dow Jones Index closed up 1.7 percent and the broad-based S&P 500 was up 1.3 percent.
The tech-heavy Nasdaq also finished in the black, up 1.0 percent, mainly on bargain-hunting after suffering a pummelling in recent days.
Large technology companies that have been slumping all enjoyed gains, including Facebook, Google parent Alphabet and Intel.
Amazon also pushed 1.5 percent higher as investors welcomed headlines which suggested US President Donald Trump did not plan to follow up a series of irate tweets with concrete action against the company.
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