European stock markets took another tumble on Tuesday, with airline shares hitting violent downdrafts after Air France-KLM issued a profits warning.
London's benchmark FTSE 100 index lost 1.25 percent to 6,738.45 points, adding to hefty losses posted a day earlier.
Frankfurt's DAX 30 was down by 1.35 percent to 9,772.67, while the CAC 40 in Paris lost an even bigger 1.44 percent to 4,342.53 points.
Madrid's IBEX 35 index shed 1.83 percent to 10,689.10 points and Milan lost 2.69 percent.
"European stock markets fell on Tuesday as investors demonstrated caution ahead of the start of the second quarter earnings season," commented Daniel Sugarman, analyst at traders ETX Capital.
"Equity markets are now drifting away from last week’s highs with attention focused on corporate results for a fresh viewpoint on the state of the health of the US economy."
Investors are also hoping to get a better handle on the state of the global economy with the release this week of Chinese economic data and minutes from the Federal Reserve's most recent policy meeting.
In New York meanwhile, stocks struggled in early trading on Tuesday, with the Dow Jones Industrial Average losing 0.63 percent to 16,917.55 points.
The broad-based S&P 500 declined by 0.54 percent to 1,966.96, while the tech-rich Nasdaq Composite Index lost 0.97 percent at 4,408.49 points.
- Pound retreats -
On foreign exchange markets Tuesday, the European single currency rose to $1.3613 from $1.3604 late on Monday in New York.
The euro also edged up to 79.48 pence from 79.42 pence, after sinking to a two-year low on Monday.
The pound dipped to $1.7125 from $1.7128 the day before.
The British currency has risen strongly in recent weeks on market expectations that the Bank of England will move soon to raise its main interest rate from a record-low level of 0.50 percent.
But official data released Tuesday dampened those expectations after it was revealed that British industrial output had unexpectedly fallen in May.
Output fell by 0.7 percent in May compared with a gain of 0.3 percent in April, the Office for National Statistics said.
Analysts' consensus forecast was for another gain of 0.3 percent in May, according to a survey by Dow Jones Newswires.
- Airlines hit turbulence -
On the corporate front, shares in airlines fell sharply after Air France-KLM slashed its earnings forecast for 2014 owing to over-capacity in traditionally lucrative long-haul routes and persistently weak cargo demand.
Europe's second biggest airline after Lufthansa said that underlying pre-tax profits would now reach around 2.2 billion and 2.3 billion euros ($3.0 billion and $3.1 billion), rather than 2.5 billion euros previously forecasted.
Shares in the company dived 8.72 percent to 8.58 euros and dragged down the entire sector.
IAG, owner of British Airways and Spain's Iberia, slumped 7.0 percent to 335.9 pence, Easyjet lost 5.81 percent to 1,248.00 pence and Lufthansa gave up 3.78 percent to 15.02 euros.
On the London Bullion Market, the price of gold climbed to $1,323 an ounce from $1,313 on Monday.