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Eurozone and US stocks sank on Tuesday on gas supply fears and renewed concerns about the impact of inflation.
In Europe, the natural gas reference price Dutch TTF surged nearly 13 percent to 203 euros ($205) per megawatt hour, one day after Russia's Gazprom said it would cut daily gas deliveries to Europe via the Nord Stream pipeline.
"With no clear timeline for when capacity is likely to increase, the prospect of further uncertainty over gas supplies is weighing on European markets today," CMC Markets analyst Michael Hewson told AFP.
Frankfurt's DAX slumped 0.9 percent while the CAC in Paris shed 0.4 percent.
"The euro is also under pressure as it becomes increasingly apparent that a slowing economy will make it increasingly difficult for the ECB to hike aggressively as we head into the winter months. Good luck raising rates against that sort of backdrop," he added.
It fell by more than one percent to under $1.0120 at one point.
Eurozone bond yields also fell as investors fled to the relative safety of government debt.
Gazprom will cut gas deliveries to 33 million cubic metres a day -- about 20 percent of the pipeline's capacity -- from Wednesday.
That has heightened market worries over supplies during the northern hemisphere winter later this year.
At the same time, European Union member states have reached agreement on how to cut their consumption of gas by 15 percent and reduce their dependence on Russian energy.
Gas prices remain way below the record March peak of 345 euros struck after Russia launched its assault on Ukraine.
EU states have accused Russia of squeezing supplies in retaliation for Western sanctions.
Elsewhere Tuesday, Asian stock markets closed mixed.
Investors welcomed news that e-commerce giant Alibaba would seek a primary listing in Hong Kong, which could pave the way for it to be traded by mainland Chinese investors.
Wall Street stocks slid, with a profit warning by Walmart rattling nerves about the impact of inflation on the economy and interest rates.
The retailer said it expects its earnings per share in its non-standard second quarter, which wraps up at the end of this month, to be down by 8-9 percent with an even bigger reduction next year.
Its shares were down around eight percent in morning trading.
"The basis for Walmart's warning, though, is the real issue for the broader market," said Patrick J. O'Hare at Briefing.com.
The retailer said food and fuel inflation was pushing consumers to defray discretionary spending on general merchandise.
"That is causing concerns about a trickle-down effect to other retailers, as well as suppliers to Walmart, that is weighing on sentiment and earnings expectations," said O'Hare.
He said this was also fanning fears the US Federal Reserve, which began a two-day meeting Tuesday, will pursue aggressive rate hikes to tame inflation despite the risk of pushing the US economy into recession.
The International Monetary Fund also cut its forecast for global growth this year by four-tenths of a point to 3.2 percent surging inflation and severe slowdowns in the United States and China, the world's two largest economies.
IMF chief economist Pierre-Olivier Gourinchas said the United States has only a slim chance of avoiding a downturn.
"The current environment suggest that the likelihood that the US economy can avoid a recession is actually quite narrow," he said as the IMF cut its forecast for US economic growth this year by a drastic 1.4 percentage points to 2.3 percent.
- Key figures at around 1530 GMT -
New York - Dow: DOWN 0.6 percent at 31,798.59 points
EURO STOXX 50: DOWN 0.8 percent at 3,575.36
Frankfurt - DAX: DOWN 0.9 percent at 13,096.93 (close)
Paris - CAC 40: DOWN 0.4 percent at 6,211.45 (close)
London - FTSE 100: FLAT at 7,306.28 (close)
Tokyo - Nikkei 225: DOWN 0.2 percent at 27,655.21 (close)
Hong Kong - Hang Seng Index: UP 1.7 percent at 20,905.88 (close)
Shanghai - Composite: UP 0.8 percent at 3,277.44 (close)
Euro/dollar: DOWN at $1.0122 from $1.0223 Monday
Pound/dollar: DOWN at $1.2024 from $1.2046
Euro/pound: DOWN at 84.20 pence from 84.83 pence
Dollar/yen: DOWN at 136.63 yen from 136.65 yen
Brent North Sea crude: DOWN 0.5 percent at $104.61 per barrel
West Texas Intermediate: DOWN 1.3 percent at $95.43 per barrel
burs-rl/lcm
J.Barnes--TFWP