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Europe's main stock gauge closed sharply lower on Tuesday, after China stocks sold off, sparking losses across global markets. The European Commission, as expected, asked the Italian government to rework its budget, adding a layer of worry.
Poor corporate results from a swath of companies also weighed on sentiment.
What are markets doing?
The Stoxx Europe 600
SXXP, -1.58%
slid 1.6% to 354.06, after Monday's loss of 0.4%.
Germany's DAX 30
DAX, -2.17%
slumped 2.2% to 11,274.28, while France's CAC 40
PX1, -1.69%
fell 1.7% to 4.967.69. The U.K.'s FTSE 100
UKX, -1.24%
slid 1.2% to 6,955.21.
Italy's FTSE MIB Italy index
I945, -0.86%
dropped 0.9% to 18,802.47.
The euro
EURUSD + 0.1483%
was steady at $ 1.1488 compared with $ 1.1467 late Monday, while the pound
GBPUSD, + 0.2545%
jumped to $ 1.3003 from $ 1.2966.
What is driving the market?
Europe stocks were firmly in the grips of a global rout that drove jittery investors to perceived havens, such as the Japanese yen
USDJPY, -0.56%
EURJPY, -0.42%
and gold
GCZ8, + 0.96%
China on the move Tuesday as the Shanghai Composite Index
SHCOMP, -2.26%
Gave up on a two-day rally, shedding 2.3% and knocking stocks across the region, as government efforts to boost the market have fallen short.
On Wall Street, U.S stock traded sharply lower.
Need to know: China's stock selloff could be a lot more havoc before it's over: Merrill Lynch
Geopolitical tensions also crept into traders' psyches after Turkey's president asserted that the killing of journalist Jamal Khashoggi was planned out by the Saudi Arabian government.
Closer to home, the European Commission rejected Italy's budget proposal.
Do not miss: A top London startup's CEO flags the biggest Brexit threat to his industry
What are strategists saying?
Fawad Razaqzada, market analyst at Forex.com, said if global equity weakness continues, U.S. stocks "might be the next big domino to fall, so far they have outperformed the rest of the world. So they could have some catching up on the downside.
"However, in the event the bulls re-emerge, then the German DAX – which had been hit the hardest among the European indexes (in part because of concerns over Germany and luxury cars from China) – could be the one to watch for potential outperformance, "he said, in a note to customers.
Stock movers
Shares of ams AG
AMS -26.33%
sank 26%, the top decliner for the Stoxx Europe 600, after the Austrian chip maker warned late Monday on its fourth quarter and that 2019 was looking gloomy.
Atos SE
ATO -22.22%
was another big loser, as the information-technology group cut its 2018 revenue guidance.
Bayer AG
BAYN, -8.64%
slid 9.5% after judging in California upheld jury verdict that linking the company's Roundup to cancer, but reduced damages by $ 200 million.
Schindler Holding AG
CSHP, -8.98%
slid 9% after the Swiss elevator maker missed third-quarter expectations.
On the upside, shares of Travis Perkins PLC
TPK, + 4.08%
rose 4.1% after the supply of products
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