Stock markets went back into selloff mode on Thursday as fears over the world's economic outlook undermined any lingering investor hopes of finishing 2018 with gains.
European equities ignored the previous day's bumper gains on Wall Street, with Frankfurt shedding a whopping 2.4 percent at the close, having plunged by more than three percent at one point during the afternoon.
The New York market itself clearly lacked confidence in the sustainability of Wednesday's roar back to life, when the Dow Jones index managed its biggest ever points gain.
Approaching midday in New York Thursday, the Dow was down again by over one percent, making Wednesday's surge look like a "dead cat bounce" -- market parlance for a brief interruption of a downward trend.
- That sinking feeling -
"US stocks are sinking," analysts at Charles Schwab noted drily.
They were, however, off their morning lows, offering a glimpse of hope that a recovery was possible by the Wall Street close.
Mirabaud Securities Geneve experts said Wednesday's surge now looked "more and more like a bear market rebound, in other words technical and not destined to last".
Investors usually define a "bear market" as a stock index suffering a decline of 20 percent or more from its recent peaks.
At current levels, Wall Street's DJIA index and the S&P 500 are both looking at losses this year of over eight percent and the Nasdaq at more than six percent.
In Europe, Frankfurt is now nearly 20 percent down from the start of the year, London over 14 percent and Paris more than 13 percent.
Global investors have been unnerved by a variety of factors, including the partial US government shutdown and US President Donald Trump's ongoing criticism of Fed Chair Jerome Powell.
Other negative factors include risks of a no-deal Brexit when Britain leaves the European Union in March 2019-- and the ongoing trade war between China and the United States.
- 'Rally hit wall' -
"The rally which we experienced over on Wall Street yesterday has hit the wall," ThinkMarkets analyst Naeem Aslam told AFP.
"Investors are busy profit-taking. Basically, we are struggling for the momentum to continue."
New York stocks had hurtled higher in post-Christmas trade on Wednesday, following strong data and White House reassurances that Powell would remain in his post.
Sentiment also improved after a Bloomberg News report said a US government delegation would travel to Beijing in early January to hold trade talks, the first face-to-face discussion since US President Donald Trump and Chinese President Xi Jinping agreed on a 90-day trade war truce.
The Dow finished nearly 1,100 points, or about five percent, higher with the broad-based S&P 500 also five percent up.
But even before Wall Street's renewed losses proved him right, Russ Mould, investment director at stockbroker AJ Bell, warned that Wednesday's "Boxing Day bonanza" could yet prove to be a "bear trap".
- 'Bear trap' -
"There is still a risk that this year's Boxing Day bonanza could be no more than a wicked bear trap set to lure investors into more trouble," Mould cautioned.
In Asia, equities mostly sparkled on Thursday, with Tokyo surging but Chinese stocks sliding on weak data showing that profits in the industrial sector declined 1.8 percent in November.
Hong Kong lost 0.7 percent and Shanghai shed 0.6 percent.
In commodity deals, oil prices fell on profit-taking after chalking up their biggest gains in almost two years on Wednesday.
Gold was set for its biggest monthly increase in almost two years, with many investors seeking havens amid intensifying global economic woes.
- Key figures around 1640 GMT -
New York - Dow: DOWN 1.2 percent at 22,607.87 points
London - FTSE 100: DOWN 1.5 percent at 6,585.91 (close)
Frankfurt - DAX 30: DOWN 2.4 percent at 10,381.51 (close)
Paris - CAC 40: DOWN 0.6 percent at 4,598.61 (close)
EURO STOXX 50: DOWN 1.2 percent at 2,937.36
Tokyo - Nikkei 225: UP 3.9 percent at 20,077.62 (close)
Hong Kong - Hang Seng: DOWN 0.7 percent at 25,478.88 (close)
Shanghai - Composite: DOWN 0.6 percent at 2,483.09 (close)
Euro/dollar: UP at $1.1411 from $1.1353 at 2200 GMT
Dollar/yen: DOWN at 110.80 yen from 111.37 yen
Pound/dollar: UP at $1.2649 from $1.2633
Oil - Brent Crude: DOWN $1.43 at $53.36 per barrel
Oil - West Texas Intermediate: DOWN $1.43 at $44.79