European stock markets slid on Wednesday, with investors spooked over a deadly missile blast in Poland near the border with Ukraine.
London dipped 0.1 per cent, also on news that UK inflation spiked to a 41-year peak in October on rocketing energy bills and food prices.
Frankfurt fell 0.9 per cent and Paris stocks sank 0.5 per cent after Asia closed mostly in the red.
The dollar fell against the euro and pound but rose against the yen, while oil advanced.
"Fears that the conflict in Ukraine could escalate after a Russian missile appeared to hit a village in Poland, a NATO member country, have held back gains on global markets," said Hargreaves Lansdown analyst Susannah Streeter. "There will be reassurance in words from (US President) Joe Biden that it was 'unlikely' to have come from Russia," she added.
The Kremlin has accused Ukraine of a deadly blast in Poland, with Belgium saying it was probably caused by Kyiv's air defences firing at Moscow's incoming missiles.
Back in Britain, official data showed that UK inflation surged in October to 11.1 per cent, the highest level since 1981 in a worsening cost-of-living crisis. The grim news came on the eve of a gloomy UK government budget that is likely to ramp up taxes and slash spending. "The UK is reeling from yet another super-hot inflation reading as soaring food and energy prices take their toll on household budgets," added Streeter.
The UK is reeling from yet another super-hot inflation reading as soaring food and energy prices take their toll on household budgets- Hargreaves Lansdown analyst Susannah Streeter
This year, the Ukraine war has massively contributed to worldwide inflation soaring to the highest level in decades. Prices are up also on pandemic-fuelled supply constraints. Rocketing inflation has forced central banks to raise interest rates by big amounts, risking a global recession.
There has been some relief from data showing US consumer prices rose much less than expected in October, suggesting months of monetary tightening by the Federal Reserve was kicking in. This was followed by data on Tuesday showing a below-forecast reading on wholesale prices.
Sentiment was further boosted by China's pledge to provide much-needed support to the country's beleaguered property sector, as well as ease some of the strict COVID-19 restrictions that have played a major role in dragging the economy down.