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| - Equity markets across the world tumbled Tuesday as a global selloff was set off by fears of spiking inflation, dealers said. London stocks dived over 3.0 percent at one point before recovering some ground to close 2.5 percent lower. Paris fell 1.9 percent and Frankfurt 1.8 percent. "European stock markets have taken a beating today over concerns about rising inflation expectations," said Michael Hewson, chief market analyst at CMC Markets UK. Traders are fearful that surging inflation could force the world's central banks to wind back ultra-loose monetary policies earlier than forecast and damage post-Covid recovery. Asia took a battering after New York was gripped Monday by a wave of selling particularly in the tech sector, which is vulnerable to higher borrowing costs due to the potential effect on future earnings and cash flow. The Dow snapped a three-day streak of records and the S&P 500 lost more than one percent, while the Nasdaq shed 2.6 percent. Asia followed the lead, with tech firms at the forefront of the selling. Tokyo and Taipei each dropped more than 3.0 percent, while Hong Kong was off 2.0 percent. Data showing a 6.8 percent rise in Chinese factory gate prices last month, the biggest jump in almost four years. That is due to a rally in commodity prices -- particularly widely used copper and iron ore -- which has markets concerned that costs will spiral. "Investors do appear to be freaking out a little bit over the recent sharp rise in commodity prices that we've seen in the past few weeks," said Hewson. Wall Street continued to fall Tuesday, with the Dow down 1.3 percent in late morning trading. The S&P 500 fell 1.0 percent and the Nasdaq shed 0.4 percent. Analyst Patrick O'Hare at Briefing.com said markets were "wrestling with the general sentiment that most stocks are over-extended and due for a pullback, if not an actual correction". US stock indices have soared to new heights on the prospects of a rebound in the economy, but there are concerns that share prices may have risen too far. "This is a cutting of the fat," O'Hare said. "It's also a reminder that valuation always matters." All eyes are now on the release this week of crucial data on US retail sales and consumer prices, with expectations for a sharp rise as the world's top economy reopens and vaccines allow people to return to a sense of normality. "Inflation is what keeps investors up at night," said Swissquote analyst Ipek Ozkardeskaya. "And the latest Chinese figures did not help soothing investors' nerves," she added. New York - Dow: DOWN 1.3 percent at 34,296.02 points EURO STOXX 50: DOWN 1.9 percent at 3,946.06 London - FTSE 100: DOWN 2.5 percent at 6,947.99 (close) Frankfurt - DAX 30: DOWN 1.8 percent at 15,119.75 (close) Paris - CAC 40: DOWN 1.9 percent at 6,267.39 (close) Tokyo - Nikkei 225: DOWN 3.1 percent at 28,608.59 (close) Hong Kong - Hang Seng Index: DOWN 2.0 percent at 28,013.81 (close) Shanghai - Composite: UP 0.4 percent at 3,441.85 (close) Euro/dollar: UP at $1.2169 from $1.2129 at 2100 GMT Pound/dollar: UP at $1.4150 from $1.4118 Euro/pound: UP at 85.99 pence from 85.90 pence Dollar/yen: DOWN at 108.48 yen from 108.81 yen Brent North Sea crude: UP 0.3 percent at $68.53 per barrel West Texas Intermediate: UP 0.3 percent at $65.14 per barrel burs-rl/jj
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