Global stock markets fell on Friday as trade war worries returned with a vengeance when China said it would target US imports worth USD 75 billion with new tariffs.
The new round in the bruising trade war between Washington and Beijing caused a sudden trend reversal in European markets which had been showing solid gains in the morning.
Wall Street, which had been expected to open higher, also came off to a weaker start.
US stocks were "decisively lower", said analysts at Charles Schwab, "with the threat of new tariffs on USD 75 billion of US goods by China causing trade fears to ramp up".
Trade blues even overshadowed excited anticipation ahead of a key speech by Federal Reserve boss Jerome Powell, which will be parsed for clues about the US central bank's plans for monetary policy.
There are hopes Powell will outline further cuts to borrowing costs, having done so last month for the first time since the financial crisis, but with the US economy in much better health than most others, analysts warn there could be some disappointment.
"One thing to reiterate going into tonight's speech is that markets seem very clearly positioned for some very dovish guidance from Mr Powell on US interest rates," said Jeffrey Halley, senior market analyst at OANDA.
"It is a dangerous assumption to make and the corrections across various asset classes if he disappoints could make for a very emotional finish to the week's trading session."