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Global markets mostly sank on Thursday on simmering trade tensions between the United States and other major world powers.
Oil prices dropped more than a dollar on the eve of an output decision from the Organisation of the Petroleum Exporting Countries (OPEC), the 14-nation cartel that pumps 40% of global crude.
Equities were rocked this week as US President Donald Trump rams through his "America First" policies, which are aimed particularly at closing a yawning trade gap with China but have sparked threats of countermeasures from Beijing.
"We have a trade war - and it's an escalating trade war," SEB chief economist Robert Bergqvist told AFP in an interview.
"And it's the fact that apparently the United States is ready to introduce tariffs on all Chinese goods - he is looking at so far $450bn and that is close to the total that they import - so it's a serious situation."
By announcing tariffs on $50bn in Chinese imports and threatening tariffs on up to $400bn more, Trump is testing an no-holds-barred strategy whose consequences remain unknown.
China accounts for about half of the soaring US trade deficit in goods, leaving the Asian powerhouse far more exposed to Trump's tariffs than vice versa.
Last year alone, the United States exported $130.4bn in goods to China but imported $505.6bn.
At the same time, Brussels will implement on Friday a raft of retaliatory tariffs against metals duties imposed by Trump on Europe and others.
Bergqvist argued that his "main concern" over a trade war was the impact on stock markets - and the subsequent knock-on effect for the world economy.
"Investors ... are more cautious today, they are waiting for the right time to reduce their exposure in stock markets," he added.
"All these kind of things going on right now could trigger that kind of behaviour and initiate a correction in the stock markets, and that could also trigger a slowdown in the global economy."
Worries over the world economy also sent the dollar up against high-yielding currencies on Thursday as traders sought out safer bets.
Bargain buyers initially took advantage of the cheap valuations on Wednesday, after Tuesday's heavy losses that came in response to the US-China standoff.
However, nervous traders turned sellers again, with analysts warning the next plunge could come at any moment, while central bankers have also voiced concerns about the impact of a trade war.
Separately, London stocks flattened and the pound continued to struggle as British Prime Minister Theresa May pushed through key Brexit legislation - but she still faces pressure to pick up the pace of talks with the EU.
Investors were braced for an interest rate call from the Bank of England, which is expected to keep its key interest rate at 0.50% in a decision due at 13:00.
Oil meanwhile sank on growing expectations that OPEC could Friday opt to deliver an increase in its collective production ceiling.
