Chinese market drop leads world stocks lower

A sharp drop in Chinese stocks led global markets broadly lower on Tuesday, as investors digest the impact of trade tensions on the country as well as other geopolitical worries, such as Italy's debt problems.

After the Shanghai index closed down 2.3 per cent at 2,594.83, European markets traded lower. Germany's DAX slipped 1.8 per cent to 11,321 and France's CAC 40 was 1.3 per cent lower at 4,990. Britain's FTSE 100 lost 0.7 percent to 6,991.

Wall Street is forecast to open lower, with the future for the S&P 500 down 1.1 per cent and the Dow future off by 1 per cent.

Traders appear to be weighing anew the impact of increased tariffs on most Chinese goods sold to the US, ranging from soybeans to electric cars and whiskey. Recent data showed China's economy grew at a 6.5 per cent annual pace in the third quarter, its slowest since 2009.

Hong Kong's Hang Seng index sank 3.1 per cent to 25,346.55. Japan's Nikkei 225 index gave up 2.7 per cent to 22,010.78 and the Kospi in South Korea tumbled 2.6 per cent to 2,106.10.

Australia's S&P-ASX 200 dipped 1.1 per cent to 5,843.10.

Margaret Yang, market analyst at CMC Markets in Singapore, said "investors are starting to price in weaker-than-expected third quarter GDP readings amid intensified trade frictions."