World stock markets mostly sank yesterday as a summit between Donald Trump and Kim Jong Un ended without an agreement.

Asian equities had been fluctuating throughout the day on tempered optimism over China-US trade talks, weak factory data from Beijing and fresh geopolitical tensions in Kashmir.

But they took a decisive turn south after an expected lunch and signing ceremony between the US and North Korean leaders was called off at the last minute.

European indices also mainly fell, with London down half a percentage point on persistent Brexit uncertainty, and the pound continuing to struggle.

Frankfurt was also down, while Paris managed to remain stable.

Wall Street was little changed at the opening bell, as news that the US economy grew at an unexpectedly strong pace in 2018 was offset by the Trump-Kim disappointment and some weak earnings reports, said analysts at Charles Schwab.

"Global equities in general have pulled back as risk sentiment took a hit after the US and North Korea failed to reach an agreement over denuclearisation for the (Korean) peninsula," said XTB analyst David Cheetham.

"US president Donald Trump and North Korean leader Kim Jong Un abruptly cut short their summit in Hanoi, and in doing so cancelled a signing ceremony as the two leaders failed to make any tangible progress and agree terms on the deal."

The news came just hours after Kim raised the prospect of a permanent US diplomatic presence in Pyongyang and Trump said he was in “no rush” for a speedy deal over North Korea's nuclear programme.

Trump later told reporters that he was not willing to give in to Kim's demands to lift US sanctions on North Korea.

In reaction, Seoul dived 1.8 per cent and Tokyo ended 0.8 per cent lower, while Shanghai and Hong Kong each shed 0.4 per cent.

The global rally that has characterised most of this year had already taken a knock after US Trade Representative Robert Lighthizer told lawmakers that “real progress” had been made in talks with China, but work was still needed before a pact is signed.

While his comments did not derail expectations of an agreement at some point ‒ with both sides reporting good progress and Trump delaying a deadline for a deal ‒ it did give traders pause for thought, observers said.

Also fuelling selling pressure was gloomy data showing Chinese manufacturing activity contracted for a third straight month in February, with factories hit by the long Lunar New Year break, concerns about slowing growth and uncertainty from the trade row.

However, Zhou Hao, a senior emerging markets economist at Commerzbank AG, said the results were likely not as bad as they seemed and the outlook could be positive.