BEIJING (AP) -- Global stock markets were mostly lower Thursday after Wall Street fell on mounting fears of a possible recession.
Benchmarks in London, Tokyo and Sydney declined while Shanghai closed higher after spending most of the day in negative territory. Frankfurt was unchanged.
U.S. investors dumped stocks Wednesday, sending the Dow Jones Industrial Average into its biggest one-day drop of the year, after the yield on 10-year Treasury bonds crossed a threshold that has correctly predicted many past recessions.
That erased the previous day's gains from a rally that began after President Donald Trump delayed tariffs on about $160 billion in Chinese goods due to take effect on Sept. 1.
"The countdown to a recession has just started," Hussein Sayed of FXTM said in a report.
Weak economic data from Germany and China added to signals of a global slowdown.
In early trading, London's FTSE 100 was down 0.3% at 7,122.66 while Frankfurt's DAX was unchanged at 11,493.92. France's CAC 40 was flat at 5,253.02.
On Wall Street, futures for the Standard & Poor's 500 Index and the Dow were up 0.5%.
In Asia, the Shanghai Composite Index gained 0.2% to 2,815.80 while Tokyo's Nikkei 225 lost 1.2% to 20,405.65. Hong Kong's Hang Seng closed up 0.8% at 25,495.46.
Australia's S&P-ASX 200 fell 2.8% to 6,408.10. Markets in Taiwan, New Zealand and Southeast Asia also retreated.
Markets in South Korea and India were closed for a holiday.
On Wall Street, the S&P 500 fell 2.9% on Wednesday and the Dow sank 800.49 points, or 3%. The Nasdaq composite also lost 3%.
Investors have been plowing money into the safety of U.S. government bonds for months amid growing anxiety that weakness in the global economy could sap American growth.
Uncertainty about the U.S.-Chinese tariff war has spurred a return of volatility to the stock market in August. The Dow has dropped more than 5% and the S&P 500 is down more than 4%.
Traders tend to shift money to the safety of U.S. government bonds when they're fearful of an economic slowdown. That causes the market price to rise and yields --- the difference between the current price and the payout when the bond matures --- to shrink.
When the yield on longer-term Treasurys falls below that of shorter-term issues, economists call that an "inverted yield curve." It suggests bond investors expect growth to slow so much that the Federal Reserve feels compelled to cut short-term interest rates to support the economy.
The yield on the 10-year Treasury dropped from 2.02% on July 31 to below 1.60%. On Wednesday, it briefly fell below the two-year Treasury's yield for the first time since 2007.
Each of the last five times the two-year and 10-year Treasury yields have inverted, a recession has followed.
AUSTRALIAN JOBS: Australia added a stronger-than-expected 41,000 jobs in July, rebounding from the previous month's contraction. Unemployment held steady at 5.2%.
ENERGY: Benchmark U.S. crude lost 9 cents to $55.14 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.82 on Wednesday to close at $55.23. Brent crude, used to price international oils, fell 23 cents to $59.25 per barrel in London. It lost $1.82 the previous session to $59.48.
CURRENCY: The dollar gained to 106.23 yen from Wednesday's 105.86 yen. The euro edged up to $1.1150 from $1.1138.