France's CAC 40 dropped 1.7% to 5,286 and the DAX in Germany was down 1.8% at 11,948. Britain's FTSE 100 lost 1.5% to 7,226, after lawmakers rejected Prime Minister Theresa May's latest Brexit offer and called for her resignation.
Wall Street was set for losses on the open, with the future contract for the S&P 500 index dropping 0.9% and that for the Dow Jones Industrial Average sliding 1% Analysts say investors seem to be preparing for the U.S.-China trade dispute to become entrenched. This month, the sides concluded their 11th round of trade talks with no agreement. Further talks have not been arranged.
The U.S. has imposed 25% tariffs on $250 billion in Chinese imports and is planning to target another $300 billion. It has also mounted sanctions against Huawei and is threatening to do the same with other Chinese companies.
China, meanwhile, has retaliated against $110 billion in U.S. products, and is offering tax cuts to software and chip companies. "The stalemate between the U.S. and China looks likely to last longer as both sides continued to ratchet up rhetoric," Zhu Huani of Mizuho Bank said in a commentary.
"Despite potential significant negative spillover effect this might have on U.S. firms, the Trump administration seems determined to curb China's rise in technology advancement," she added. In Asia, the Shanghai Composite index retreated 1.4% to 2,852.52. Hong Kong's Hang Seng tumbled 1.6% to 27,267.13 and the Kospi in South Korea was 0.3% lower at 2,059.59. Australia's S&P ASX 200 fell 0.3% to 6,491.80. Shares slipped in Taiwan, Singapore and the Philippines but rallied in Indonesia.
Japan's Nikkei 225 index lost 0.6% to 21,151.14, after a private survey suggested that manufacturing contracted in May. The Markit/JMMA flash purchasing managers' index fell to 49.6 in May from 50.2 in the previous month. Numbers above 50 on the index show acceleration.
ENERGY: Benchmark U.S. crude lost 96 cents to $60.46 per barrel in electronic trading on the New York Mercantile Exchange. It gave up $1.71 to settle at $61.42 per barrel on Wednesday. Brent crude, the international standard, shed $1.10 to $69.89 per barrel. The contract slipped $1.19 to $70.99 in the previous session.
CURRENCIES: The dollar fell to 110.08 Japanese yen from 110.34 yen late Wednesday. The euro weakened to $1.1135 from $1.1151.