LONDON: Equity markets across the world tumbled Tuesday as a fierce global selloff erupted on fears over spiking inflation, dealers said.

London stocks dived 3.0 percent, Frankfurt slumped 2.5 percent and Paris shed 2.3 percent in afternoon deals.

"European stocks are tanking lower after a weak handover from Wall Street" on Monday, said OANDA analyst Sophie Griffiths.

"Inflation concerns sent tech stocks tumbling overnight, and the sector has come under pressure in Europe today."

Traders are fearful that surging inflation could force the world's central banks to wind back ultra-loose monetary policies earlier than forecast and damage post-Covid recovery.

Asia took a battering after New York was gripped Monday by a wave of selling, particularly in the tech sector which is vulnerable to higher borrowing costs due to the potential effect on future earnings and cash flow.

The Dow snapped a three-day streak of records and the S&P 500 lost more than one percent, while the Nasdaq shed 2.6 percent.

Asia followed the lead, with tech firms at the forefront of the selling.

Tokyo and Taipei each dropped more than 3.0 percent, while Hong Kong was off 2.0 percent.

Wall Street continued to fall at the opening bell on Tuesday, with the Dow dropping 0.9 percent. The S&P 500 lost 1.3 percent and the Nasdaq tumbled 2.2 percent.

Analyst Patrick O'Hare at Briefing.com said that markets are "wrestling with the general sentiment that most stocks are overextended and due for a pullback, if not an actual correction."

US stock indices have soared to new heights on the prospects of a rebound in the economy, but there are concerns that share prices may have risen too far.

"This is a cutting of the fat," O'Hare said. "It's also a reminder that valuation always matters."

All eyes are now on the release this week of crucial data on US retail sales and consumer prices, with expectations for a sharp rise as the world's top economy reopens and vaccines allow people to return to a sense of normality.

A massive miss on US jobs creation last week that indicated the recovery was not going to be as smooth as thought provided some relief from fears of a quick rise in central bank rates.

But a rally in commodities -- particularly widely used copper and iron ore -- has markets concerned that costs will spiral.

Signs that this is having an effect were seen in data from China that showed prices paid at the country's factory gates rose last month at their fastest pace in almost four years.

"Inflation is what keeps investors up at night," said Swissquote analyst Ipek Ozkardeskaya.

"And the latest Chinese figures did not help soothing investors' nerves."

Key figures around 1330 GMT -

London - FTSE 100: DOWN 3.0 percent at 6,912.72 points

Frankfurt - DAX 30: DOWN 2.5 percent at 15,017.94

Paris - CAC 40: DOWN 2.3 percent at 6,237.54

EURO STOXX 50: DOWN 2.6 percent at 3,919.86

Tokyo - Nikkei 225: DOWN 3.1 percent at 28,608.59 (close)

Hong Kong - Hang Seng Index: DOWN 2.0 percent at 28,013.81 (close)

Shanghai - Composite: UP 0.4 percent at 3,441.85 (close)

New York - Dow: DOWN 0.9 percent at 34,448.44

Euro/dollar: UP at $1.2152 from $1.2129 at 2100 GMT

Pound/dollar: UP at $1.4125 from $1.4118

Euro/pound: UP at 86.04 pence from 85.90 pence

Dollar/yen: DOWN at 108.46 yen from 108.81 yen

Brent North Sea crude: DOWN 1.5 percent at $67.33 per barrel

West Texas Intermediate: DOWN 1.6 percent at $63.89 per barrel