World stock markets tumbled on Tuesday as fears about a slowing global economy gripped investors, just as the U.S. Federal Reserve looks set this week to deliver its fourth interest-rate hike of the year.
Germany's Ifo economic institute said its business climate index fell for the fourth month in a row to its lowest level in more than two years, adding to the global growth worries.
Blue-chip bourses in London, Paris and Frankfurt fell as much as 0.8 percent in early trade with oil stocks leading the decline as crude prices slid more than three percent.
Japan's Nikkei lost 1.8 percent, with Monday's fall in U.S. stocks to their lowest levels in more than a year hurting sentiment broadly.
Turbulent stock markets and slowing international growth have fueled speculation that the Federal Reserve, which opens a two-day meeting on Tuesday, could now pause its tightening cycle or risk harming the U.S. economy.
MSCI's world stock index, down a quarter of a percent on Tuesday, has slid 9 percent this year and is set for its worst year in a decade.
"This year has been quite remarkable in the sense that pretty much all asset classes have been down, which is even worse than 2008 because during the GFC (global financial crisis) we at least saw some safe havens - U.S. government bonds, gold - performing positively," said Stefan Keller, asset allocation strategist at Candriam in Luxembourg.
"At least in real terms, that's not the case today. This is indeed a huge challenge. Clearly it's in sharp contrast to last year's optimistic outlook."
While the Fed is expected to lift rates this week, many investors expect signs of economic turbulence to prompt the Fed to signal a slowdown in the pace of tightening next year.