Stock markets and oil prices slumped Wednesday as investors reacted to weak Chinese growth data and an unexpected rise in UK inflation.
China's economy, the world's second-biggest after the United States, grew last year at one of its slowest paces in more than three decades.
China's National Bureau of Statistics said that gross domestic product expanded 5.2 percent, in line with expectations.
However, official data showing UK annual inflation inched up to 4.0 percent in December from 3.9 percent the previous month confounded market forecasts of a slight reduction.
It dashed hopes the Bank of England would cut interest rates in the first half of 2024, boosting the pound against the dollar and euro.
The surprise rise in UK inflation came as traders increasingly expect the US Federal Reserve and European Central Bank (ECB) to also delay cutting rates as global inflation takes longer to come down than thought.
"Investors have had to rip up their game plan after UK inflation went in the wrong direction to support the narrative for interest rate cuts," noted AJ Bell investment director Russ Mould.
Over in the eurozone, the ECB could start cutting interest rates this summer, President Christine Lagarde said Wednesday, but she stressed that any such move would depend on economic data.
As for China, it "may have hit official growth targets, but it is still an economy under pressure", said XTB research director Kathleen Brooks.
The Shanghai stock markets closed down more than two percent Wednesday and Hong Kong tumbled nearly four percent.
"The headwinds facing China's economy in 2023 have not subsided, and the geopolitical environment may become more contentious following election results in Taiwan," warned SPI Asset Management's Stephen Innes, referring to the victory for pro-sovereignty candidate Lai Ching-te in a weekend presidential vote.
London - FTSE 100: DOWN 1.5 percent at 7,447.19 points
Paris - CAC 40: DOWN 1.1 percent at 7,314.58
Frankfurt - DAX: DOWN 1.0 percent at 16,403.15
EURO STOXX 50: DOWN 1.1 percent at 4,399.23
Tokyo - Nikkei 225: DOWN 0.4 percent at 35,477.75 (close)
Hong Kong - Hang Seng Index: DOWN 3.7 percent at 15,276.90 (close)
Shanghai - Composite: DOWN 2.1 percent at 2,833.62 (close)
New York - Dow: DOWN 0.6 percent at 37,361.12 (close)
Pound/dollar: UP at $1.2676 from $1.2635 on Tuesday
Euro/pound: DOWN at 85.78 pence from 86.07 pence
Euro/dollar: DOWN at $1.0873 from $1.0879
West Texas Intermediate: DOWN 2.1 percent at $70.92 per barrel
Brent North Sea Crude: DOWN 1.8 percent at $76.86 per barrel
