European equities staged an unconvincing rebound on Tuesday, briefly winning support after Beijing pumped cash into the money market to soothe worries over the slowing Chinese economy.
Frankfurt, London and Paris won about 1.0 percent in early deals, but turned lower as the morning progressed and investors shunned risky assets amid ongoing jitters over China and the Middle East.
The euro meanwhile hit a one-month low at $1.0765 on news that eurozone inflation was unchanged at a weaker-than-expected 0.2 percent in December.
Adding to the picture, oil prices dipped Tuesday as the crude supply glut overshadowed a diplomatic row between key producers Saudi Arabia and Iran.
Global stock markets had tanked Monday with Chinese equities automatically suspended after slumping on weak manufacturing data from the world's second biggest economy.
Miners and oil firms were among the worst casualties from the fierce selloff because China is a top consumer of commodities.
- Coming to terms with 'new' China -
"Markets are in a very much risk-off scenario with investors not wanting to start the year off with big losses so the riskier assets are suffering, such as equity markets," said analyst James Hughes at trading firm GKFX.
There are still worries about the stability of the Chinese economy and the ability of the rest of the global economy to come to terms with the new China, one that no longer looks to double-digit GDP growth as the norm.
"Markets have not coped well with this up to now," he told AFP.
Asian markets mostly fell Tuesday, with Shanghai down 0.3 percent after a topsy-turvy session that witnessed opening losses of three percent.
State-controlled funds bought stocks on Tuesday, Bloomberg News reported, quoting people familiar with the matter, mirroring moves last year when the government waded into the market to halt a rout.
The People's Bank of China, the central bank, also pumped 130 billion yuan ($20 billion) into the money market, according to a statement.
"Whilst European investors may have initially taken China’s market injection has a rebound-worthy bit of news, the fact is that ... this still didn’t help the Shanghai Composite avoid a wild, and negative, session of trading," said Spreadex analyst Connor Campbell.
In echoes of the summer's turbulence that saw trillions wiped off valuations, most bourses in Asia tumbled in the first few minutes of trade on Tuesday before bouncing in and out of positive territory throughout the day.
The selling on Monday was fuelled by more downbeat data on Chinese factory activity, the latest evidence showing the Asian powerhouse economy struggling with its lowest annual growth rates in 25 years.
The data -- combined with the expiration this Friday of China's measures brought in to curb last year's share slump -- sent Shanghai stocks crashing almost seven percent on Monday.
Regulators halted trading in China before the scheduled close on Monday, the first day a new circuit breaker mechanism was in place.
Elsewhere on Tuesday, Hong Kong finished 0.7 percent lower, having also enjoyed healthy buying spells, while Tokyo closed down 0.4 percent.
More gloomy data on Monday revealed that factory activity in the United States -- the world's biggest economy followed by number two China -- had also contracted last month.
Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors, said he expected China to further ease monetary policy, adding to the six interest rate cuts between November 2014 and November 2015.
"We've been reminded that volatility in financial markets remains high and that the global economy still needs monetary policy support," he added.
- Key figures around 1030 GMT -
London - FTSE 100: DOWN 0.1 percent at 6,084 points
Paris - CAC 40: DOWN 0.7 percent at 4,489
Frankfurt - DAX 30: DOWN 0.9 percent at 10,191
EURO STOXX 50: DOWN 0.7 percent at 3,142
Tokyo - Nikkei 225: DOWN 0.4 percent at 18,374.00 (close)
New York - Dow: DOWN 1.6 percent at 17,148.94 (close)
Euro/dollar: DOWN at $1.0773 from $1.0833 late Monday
Dollar/yen: UP to 118.88 yen from 119.42 yen