(Bloomberg) -- What de-escalation?
Tuesday’s abrupt delay by the U.S. in raising tariffs on some Chinese goods quickly faded from memory as pessimism over the global economy pervaded markets worldwide.
The Stoxx Europe 600 Index extended its decline to 1.5% as of 1:48 p.m. in London, more than erasing Tuesday’s gain and set for the lowest close in six months. Cyclical sectors including autos and mining led losses. Germany’s DAX plunged 1.9%, poised to close at the weakest level since March.
While the U.S.-China tit-for-tat over trade may have abated for now, disappointing economic data from Chinese industrial output to German gross domestic product fueled fears of a recession. Risk aversion was in full display in bonds, with the 10- and two-year portion of the U.S. and U.K. yield curves inverting.
Respite has been brief for European stocks of late, hit by a cocktail of risks from around the world including trade uncertainty, Brexit, the prospect of Italian elections and unrest in Hong Kong. The Stoxx 600 has fallen in all but three sessions so far in August, and is heading for its steepest monthly decline since May.
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