Oil prices sank and global stock markets diverged today, with Hong Kong suffering its worst day in 16 years as China held off announcing fresh measures to boost its economy.

Wall Street’s main indexes were mostly higher this afternoon in New York on optimism about the health of the US economy.

European stock markets closed lower, pulled down by the slide in Asia and by dashed hopes of greater Chinese demand.

Kathleen Brooks, research director at XTB, said:

Financial markets are mostly in a risk-off mood on Tuesday, as China has stopped its drip feed of stimulus [and] commodity prices fall.

Oil prices were down as much as 5 percent at times in volatile trading Tuesday as doubts returned about Chinese demand and Israel comes under international pressure not to strike Iranian oil installations.

Healthy US stockpiles and expectations of ample supply both in and out of Opec also helped dent oil’s recent rally.

Global stock markets have been lifted in recent sessions as China announced stimulus measures, boosting hopes of greater Chinese demand for oil, metals, luxury goods and more.

Share prices across all three sectors slumped Tuesday, pushing Europe’s main indices into the red.

European luxury and spirits companies were further hit as Beijing announced tariffs on brandy imported from the European Union, in an apparent riposte to EU duties on Chinese electric cars.

Remy Cointreau – whose brands include Louis XIII, Remy Martin and Cointreau – tumbled more than 6pc.

Pernod Ricard, which owns Martell cognac, dropped nearly 4pc.

LVMH, which owns Hennessy cognac, shed more than 3pc and Gucci-owner Kering retreated over 4pc.

Burberry shares retreated 5.6pc in London. London was also pulled lower by energy and mining companies.

US shares slumped Monday after rallying the previous week, and that encouraged some “Pavlovian buy-the-dip interest” on Tuesday afternoon, according to Patrick O’Hare, an analyst at Briefing.com.