Beijing slapped a higher 84-percent levy on US goods, while the EU targeted more than 20 billion euros ($22 billion) of US products including soybeans, motorcycles and beauty products.

Growing fears of weakened demand sent oil prices to four-year lows, with international benchmark Brent North Sea crude dropping under $60.

Paris and Frankfurt fell more than three percent, as goods from the European Union now face a 20 percent tariff when entering the United States.

London slumped 2.8 percent, with Britain having been hit with a 10 percent levy on Saturday.

Most Asian equities markets fell back into the red -- Tokyo closed down 3.9 percent.

Wall Street's main indices opened mixed as US Treasury Secretary Scott Bessent made a series of comments that did not augur well for ending tit-for-tat reprisals.

Any hopes of a last minute roll-back on tariffs were dashed as the United States earlier hit China -- its major trading partner -- with tariffs now reaching 104 percent.

"The world's largest and second largest economies are now locked in a trade war, and neither nation seems willing to back down," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Beijing warned that China had "firm will and abundant means" to fight a trade war, state news agency Xinhua said.

Speculation that Beijing will unveil stimulus measures helped Shanghai and Hong Kong stocks buck the downward trend in Asian equities.

Pharmaceutical firms took a heavy hit after Trump said he would be announcing a major levy on the sector.

Europe's most valuable company, weight-loss drug maker Novo Nordisk, dived nearly six percent and British pharmaceutical giant AstraZeneca fell nearly seven percent.

- Bond yields rise -

"Alarmingly, US Treasury markets are also experiencing an incredibly aggressive selloff... adding to the evidence that they're losing their traditional haven status," said Jim Reid, managing director at Deutsche Bank.

The sharp rise in yields on US government bonds triggered similar increases to borrowing costs in the UK and Japan, as expectations for global growth and spending diminished.

"It feels like no asset class has been spared as investors continue to price in a growing probability of a US recession," Reid added.

The rising yields may be an indication that investors need to sell bonds to cover losing positions in equity markets, which have fallen sharply in recent weeks.

"When a few asset classes come under pressure, losses can pile up for investors and traders who are then forced to sell other investments including haven assets like government bonds" to cover their positions, said XTB research director Kathleen Brooks.

Foreign exchange markets were similarly rattled on Wednesday -- Beijing has allowed the yuan to weaken to a record low against the dollar, while the South Korean won also hit its weakest since 2009 during the global financial crisis.

Safe-haven yen rose more than one percent.

South Korea unveiled a $2 billion emergency support for its crucial export-focused carmakers, warning Trump's 25 percent tariffs on the sector could deal a terrible blow.

To help shore up their economies, India and New Zealand's central banks cut interest rates.

- Key figures around 1330 GMT -

New York - Dow: DOWN 0.8 percent at 37,343.90 points

New York - S&P 500: DOWN 0.4 percent at 4,963.61

New York - Nasdaq Composite: UP less than 0.1 percent at 15,279.14

London - FTSE 100: DOWN 2.8 percent at 7,690.78

Paris - CAC 40: DOWN 3.2 percent at 6,871.31

Frankfurt - DAX: DOWN 3.1 percent at 19,654.49

Tokyo - Nikkei 225: DOWN 3.9 percent at 31,714.03 (close)

Hong Kong - Hang Seng Index: UP 0.7 percent at 20,264.49 (close)

Shanghai - Composite: UP 1.3 percent at 3,186.81 (close)

Euro/dollar: UP at $1.1077 from $1.0959

Pound/dollar: UP at $1.2790 from $1.2766

Dollar/yen: DOWN at 144.47 yen from 146.23 yen on Tuesday

Euro/pound: DOWN at 86.60 pence from 85.78 pence

West Texas Intermediate: DOWN 4.4 percent at $56.98 per barrel

Brent North Sea Crude: DOWN 4.3 percent at $60.11 per barrel

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