Tuesday 21:00 BST. Concerns about slowing growth in China and news of a sharp fall in German investor sentiment provided a negative backdrop for global stocks, with a fresh retreat for oil prices adding to the gloomy mood.

There was also plenty of uncertainty about US corporate earnings as the quarterly reporting season picked up pace.

The softer tone to US equities helped bolster Treasury prices while the dollar touched a fresh three-week low against a basket of currencies. Sterling fell back after data showed that UK inflation had turned negative last month.

But it was a worrying batch of Chinese trade data that grabbed the early headlines. Although a 3.7 per cent drop in exports in dollar terms in the year to September was not as bad as expected, news of a 20.4 per cent slide in imports set alarm bells ringing.

“The sharp decline in imports reflects the decline in commodity prices, and will heighten concerns over weakening domestic demand in China as well,” said Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi UFJ.

“Weakness in domestic demand will reinforce expectations that the Chinese authorities will need to provide more stimulus to support growth, thereby reinforcing renminbi devaluation expectations.”

Ian Williams, strategist at Peel Hunt, noted that the import data were subject to distortions from volatility in the prices of individual commodities.

But he added: “Even allowing for those factors, soft demand for imported raw materials confirms that the outlook for Chinese industrial production and investment remains subdued.”

Indeed the data hit so-called “commodity currencies”, with the Australian and Canadian dollars weakening 1.4 per cent and 0.2 per cent, respectively, against their US namesake.

The Shanghai Composite equity index edged up 0.2 per cent as participants weighed up the chances that Beijing could unleash further stimulus measures to support the economy.

Elsewhere in Asia the mood was more downbeat. Tokyo returned from a long weekend in bearish mood, with the Nikkei 225 dropping 1.1 per cent, while Hong Kong stocks shed 0.6 per cent.

The negativity flowed through to European stock markets, with the FTSE Eurofirst 300 index falling 0.9 per cent.

The S&P 500 index gave back an early advance to finish 0.7 per cent lower at 2,003, while the CBOE Vix index was up 8.4 per cent in late trade at 17.5.

Energy stocks turned lower as Brent oil fell another 1.2 per cent to $49.24 a barrel. The crude benchmark sank more than 5 per cent on Monday.

Copper also came under pressure, falling 0.8 per cent in London to $5,273 a tonne.

Worries about the outlook for global growth were heightened by news that the German Zew index of investor sentiment had tumbled to 1.9 this month from 12.1 in September, far more than expected and the weakest reading in a year.

Jennifer McKeown at Capital Economics said the data “confirmed that concerns over the global environment and the scandal at Volkswagen are taking a toll on investor confidence, which might affect economic activity in the months ahead”.

She added: “The fact that the headline index is now only just above zero means that only a small majority of investors see economic conditions improving in the next six months.”

The data had a relatively muted impact on the euro, which was up 0.3 per cent against the dollar to $1.1387. However, the single currency was 0.8 per cent higher versus the broadly weaker pound at £0.7460. Sterling was also down 0.5 per cent against the dollar at $1.5260.

The UK currency had initially risen after London-listed brewer SABMiller agreed “in principle” to a £68bn takeover by rival Anheuser-Busch InBev — one of the UK’s biggest M&A deals to date — but then went into retreat after data showed consumer prices falling 0.1 per cent in the year to September.

James Knightley, an economist at ING, said that the move into deflation was unlikely to last long.

“With oil prices appearing to have found a floor, sterling having softened a little and the supermarket price war perhaps having less of a depressing impact on food prices, we see the potential for headline CPI to pick up relatively swiftly,” he said.

The Chinese trade data helped lift demand for US government bonds, with the 10-year Treasury yield, which moves inversely to the price, down 5 basis points at 2.05 per cent.

The 10-year German Bund yield, however, edged up 1bp to 0.59 per cent.

The dollar index climbed off the session’s low of 94.53 but was still 0.1 per cent weaker at 94.71, helping gold edge up $4 to $1,167 an ounce.

Emerging market currencies went into retreat after signs of stabilisation. The dollar was up 1 per cent against the Malaysian ringgit and 1.6 per cent versus the Indonesian rupiah.

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