LONDON: Fresh evidence of China’s economic slowdown sent world stock markets tumbling on Monday, with Europe and the United States following Asia sharply lower in a gloomy start to 2016.

Shanghai equities plunged 7 per cent, leading an Asian meltdown, as more weak factory data fanned fears about the health of the world’s second biggest economy.

In afternoon trading London stocks lost 2pc with China-exposed mining companies falling the heaviest.

In the eurozone, Frankfurt stocks dropped 3.7pc, having been down more than 4pc for a period, and Paris shed 2.1pc.

Wall Street also opened sharply lower, with the Dow dropping over 2pc.

“Equity markets have made a rather negative start to 2016, with China making an early appearance to remind us of global growth woes,” said Mike van Dulken, head of research at traders Accendo Markets.

London’s top fallers were mining giants Anglo American and Glencore, which both tanked by over 5pc each on demand fears in leading commodity consumer China. Peer Antofagasta shed 4.3pc.

Global markets were also spooked over the flare-up in tensions between Iran and Saudi Arabia, as investors returned to their desks after the Christmas and year-end holidays.

World oil prices edged higher as key crude exporter Saudi Arabia cut diplomatic ties with fellow Opec member Iran.

“On the first trading day of 2016, the markets have got off to a shocking start,” added analyst Manoj Ladwa at brokerage TJM Partners.

“The problems in the Middle East have taken a turn for the worse with the Saudi-Iran stand-off. And China has only added to the negative sentiment as their economy shows further signs of slowing,” he told AFP.

“Not the best start to the New Year — but if the market is able to get the current bearishness out of the way, a recovery in stocks by the end of the week is a strong possibility.”

Published in Dawn, January 5th, 2016