Asian and European stocks slid Monday as US tariffs on another $200 billion of Chinese imports took effect, clouding the global economic outlook as the trade war reached a fever pitch.
Beijing, whose retaliatory tariffs on $60 billion in American goods are set to kick in, hit back by accusing Washington of "economic intimidation".
Hopes for talks to resolve the long-running spat appeared to have been dashed as Beijing reportedly cancelled the visit of a negotiating team that had been expected September 27-28 in Washington.
"Trade war concerns remain front and centre for financial markets, with European markets following their Asian counterparts lower," said IG analyst Joshua Mahony.
The latest US tariffs against Beijing brings the amount of goods hit by duties to more than $250 billion, roughly half of China's US exports, with American consumers set to feel the pain.
"Global equities are under pressure as China called off planned trade talks with US, potentially triggering an escalation in the tariff war between the world’s largest economies," added Oanda analyst Dean Popplewell.
- Oil hits 2014 peak -
Oil meanwhile spiked higher after the world's top producers decided to maintain output during a meeting in Algeria at the weekend, in an apparent rebuff to pressure from Trump to lower prices.
Brent North Sea crude for delivery in November soared to $80.94 per barrel -- the highest level since November 12, 2014 -- before pulling back somewhat.
A committee comprised of the Organization of the Petroleum Exporting Countries (OPEC) cartel and non-OPEC producers said in Algiers that it was satisfied with the current market outlook, which represented "an overall healthy balance between supply and demand".
"Clearly some speculators had expected the world's biggest oil producers to potentially raise crude production levels after Donald Trump's rant in a tweet last week," said Forex.com analyst Fawad Razaqzada.
"So, when the OPEC and its allies refused to do that, those short bets had to be abandoned quickly, causing prices to spike to a new four-year peak."
In Asia, Hong Kong led a sell-off during holiday-thinned business as trade tensions burst back on the scene.
The recent optimism in the US economy that saw equities rack up healthy gains over the past two weeks was replaced by fresh trade concerns.
- Corporate newsflow -
London investors also digested a brace of merger and acquisition news.
Bucking the downtrend, Sky shares soared almost nine percent after US cable giant Comcast successfully bid £30.6 billion ($40 billion, 34 billion euros).
Comcast outgunned Rupert Murdoch's 21st Century Fox in a dramatic weekend auction for the pan-European television operator.
And miner Randgold rose about six percent after agreeing to a takeover from Canadian titan Barrick Gold to create a global industry champion worth $18.3 billion.
On the downside, holiday operator Thomas Cook saw its share price collapse by 22 percent after issuing a profit warning on weak demand in the face of Europe's recent heatwave. The news also sent rival TUI shares down almost three percent.
The pound struggled to recover from Friday's steep losses after British Prime Minister Theresa May said Brexit talks were "at an impasse".
- Key figures around 1130 GMT -
London - FTSE 100: DOWN 0.2 percent at 7,473.65 points
Frankfurt - DAX 30: DOWN 0.4 percent at 12,385.09
Paris - CAC 40: DOWN 0.3 percent at 5,479.84
EURO STOXX 50: DOWN 0.4 percent at 3,415.89
Hong Kong - Hang Seng: DOWN 1.6 percent at 27,499.39 (close)
Tokyo - Nikkei 225: Closed for a holiday
Shanghai - Composite: Closed for a holiday
New York - Dow Jones: UP 0.3 percent at 26,743.50 (close)
Euro/dollar: UP at $1.1766 from $1.1749 at 2100 GMT
Pound/dollar: UP at $1.3116 from $1.3072
Dollar/yen: UP at 112.67 yen from 112.59 yen
Oil - Brent Crude: UP $1.80 at $80.60 per barrel
Oil - West Texas Intermediate: UP $1.30 at $72.08