LONDON: US stocks followed European stocks down on Wednesday (Oct 17) on stubborn worries over global trade and high oil prices, while an EU offer to extend Britain's Brexit transition period could not keep London in positive territory.
That offer and lower British inflation had briefly helped the FTSE 100 index higher but the index closed just in the red, while Frankfurt and Paris suffered larger falls despite earlier Asian gains.
On Wall Street, the Dow had shed 0.3 per cent more than two hours into trading.
Barclays chief European economist Antonio Garcia Pascual said two key factors were casting a shadow over the wider outlook: the potential prospect of US$100 oil and the festering global trade war.
Capital Economics warned of an impending slowing of the US economy as monetary policy tightens.
"We are not explicitly forecasting a recession, but we believe that the economy will slow sharply in 2019 as prior monetary tightening bites and fiscal stimulus fades," the consultancy said.
Oil fell Wednesday after data showed a drop in US stockpiles - but dealers kept a close eye on Riyadh, with major producer Saudi Arabia under intense pressure over the disappearance of journalist Jamal Khashoggi.
OIL SUPPLY SHOCK?
Traders are on tenterhooks over any fallout because OPEC kingpin Saudi Arabia is the world's biggest oil exporter.
Investors fear oil could shoot back above US$100 per barrel on Saudi tensions - and also on sliding output from Iran which faces renewed US sanctions next month.
"This is a big issue for Europe in general because Europe is highly oil dependent," Pascual told AFP. "A big supply shock could be something that Europe would not cope very well with."
Meanwhile, this year US President Donald Trump has levied or threatened tariffs on goods from economies around the world, notably China, but also on traditional allies including the European Union.
"I'm very worried about trade," said Pascual, noting Trump's threat of a 25-per cent tariff on European car imports. "We have US-China trade war - but we also have the prospect of a US-EU trade war."
'WORST CASE SCENARIO'
Barclays estimates that a scenario of US$100 oil could slash 0.6 percentage points from its current 2019 global economic growth guidance of 3.8 per cent.
The bank also estimates that its "worst-case scenario" of US$100 oil and a US-EU trade war could slash 2019 eurozone economic growth by 1.0 percentage points from its current forecast of 1.9 per cent.
European economies are already being buffeted by concerns surrounding Brexit as well as Italy's fiscal troubles.
Key figures around 1545 GMT:
New York - Dow Jones: DOWN 0.3 per cent at 25,722.43
London - FTSE 100: DOWN 0.1 per cent at 7,059.40 points (close)
Frankfurt - DAX 30: DOWN 0.5 per cent at 11,724.09 (close)
Paris - CAC 40: DOWN 0.5 per cent at 5,144.95 (close)
EURO STOXX 50: DOWN 0.4 per cent at 3,243.08
Tokyo - Nikkei 225: UP 1.3 per cent at 22,841.12 (close)
Shanghai - Composite: UP 0.6 per cent at 2,561.61 (close)
Hong Kong - Hang Seng: Closed for a public holiday
Euro/dollar: DOWN at US$1.1540 from US$1.1574
Pound/dollar: DOWN at US$1.3132 from US$1.3181
Dollar/yen: DOWN at 112.14 from 112.25 yen
Oil - Brent Crude: DOWN US$1.55 at US$79.66 per barrel
Oil - West Texas Intermediate: DOWN US$2.00 at US$69.92 per barrel