LONDON: World stocks slid Tuesday after Moderna warned current vaccines might be less effective at fending off the Omicron variant, and after eurozone inflation spiked to a record high.
Frankfurt, London and Paris followed Asia sharply lower, with sentiment dogged by fears of fresh economic fallout from the long-running Covid crisis.
Oil prices took a tumble following the Moderna remarks, which have reignited stubborn concerns over energy demand.
The markets selloff accelerated as data showed eurozone inflation rocketed on runaway energy prices to a record 4.9 percent.
"It only took one comment from the boss of drugs firm Moderna to derail markets once again," noted AJ Bell investment director Russ Mould.
"Markets hate uncertainty, and this is precisely what we have now. No-one knows how much trouble the new variant is going to cause."
Moderna chief executive Stephane Bancel's comments, in an interview with the Financial Times, sent traders running for cover.
"There is no world, I think, where (the effectiveness) is the same level ... we had with Delta," Bancel told the newspaper.
The high amount of mutations on Omicron and its swift spread in South Africa indicated the present jabs would need to be tweaked, he indicated.
In foreign exchange, the euro rose Tuesday as data showed eurozone inflation soared in November to more than double the European Central Bank's 2.0-percent target.
Sky-high inflation has placed intense pressure on the ECB and the US Federal Reserve to rein in vast stimulus programmes -- with traders also fearing premature interest rate hikes to tame prices.
European stocks rebound at open after Omicron freefall
However, the emergence this week of the Omicron mutant coronavirus strain has complicated the picture.
"The inflation drumbeat continues to sound, providing another reason to worry for beleaguered investors," said IG analyst Chris Beauchamp.
"With central banks having done their utmost in the previous part of this (Covid) crisis, there is fear that they will be less able to act this time, and indeed may still continue on a tightening path."
Later on Tuesday, markets will digest key testimony from US Treasury Secretary Janet Yellen and Federal Reserve chair Jay Powell.
"All eyes are again on US fiscal and monetary policy and if either official needed an excuse to continue to leave policy ultra-loose then the latest variant of the COVID-19 virus is surely it," added Mould at AJ Bell.
In Britain, meanwhile, traders are also reassessing hopes of a pre-Christmas interest rate hike.
Prior to Omicron, the Bank of England had been forecast to lift rates to dampen near decade-high UK inflation.
"Hopes are fading that the Bank of England will raise interest rates later this month," noted Hargreaves Lansdown analyst Susannah Streeter, citing the uncertain impact of the new variant.
Key figures around 1140 GMT
London - FTSE 100: DOWN 1.2 percent at 7,025.09 points
Frankfurt - DAX: DOWN 1.3 percent at 15,077.14
Paris - CAC 40: DOWN 1.3 percent at 6,691.62
EURO STOXX 50: DOWN 1.4 percent at 4,051.09
Tokyo - Nikkei 225: DOWN 1.6 percent at 27,821.76 (close)
Hong Kong - Hang Seng Index: DOWN 1.6 percent at 23,475.26 (close)
Shanghai - Composite: FLAT at 3,563.89 (close)
New York - Dow: UP 0.7 percent at 35,135.94 (close)
West Texas Intermediate: DOWN 2.8 percent to $68.02
Brent North Sea crude: DOWN 3.0 percent at $71.26
Euro/dollar: UP at $1.1356 from $1.1291 at 2200 GMT on Monday
Dollar/yen: DOWN at 112.87 yen from 113.53 yen
Pound/dollar: UP at $1.3343 from $1.3315
Euro/pound: UP at 85.07 pence from 84.80 pence
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