BENGALURU European shares fell to near six-month lows amid a global selloff in equities, on fears of a slowdown in US economic growth, with only a handful of stocks trading in the green.

The pan-European STOXX 600 index was down 2.2% to 487.15 points, its lowest since Feb 14, by 0827 GMT.

The Euro STOXX volatility index jumped 5.7 points to 30.26, its highest since March 2023.

Fears that the US could be heading towards a recession have sent investors dashing away from risk assets. Japan's Nikkei closed 13% lower.

Germany's DAX, France's CAC 40, Britain's FTSE and Spain's IBEX 35 all fell more than 2%.

"You don't get the Nikkei falling by its largest amount in nearly 40 years without some kind of repercussions across European markets," Chris Beauchamp, chief market analyst at IG Group said.

"These things don't usually stop on a dime, it takes a few days to sort out... but the initial panic appears to be over."

Energy stocks took the most hit, falling 3.4% after oil prices dropped 1%, as US recession fears offset supply worries in the Middle East.

Financial shares were also hit. Banks lost 3%, financials services shed 2.8%, while the tech sector slipped 2.1%.

Investors will get a read on US employment in the service sector from the ISM non-manufacturing survey later in the day.

Last week, a worryingly weak July payrolls report sparked investor worries on the health of the US economy, spurring a risk-off sentiment globally.

The STOXX 600 saw its worst week in nearly 10 months on Friday, and fell below the 500-mark for the first time since April 15.

Markets see a 78% chance of a 50-basis-point cut by the Federal Reserve on Sept 18, while traders expect a second cut by the European Central Bank on Sept 12.

On the data front, growth in euro zone business activity stalled last month - Purchasing Managers' Index for the currency union fell to 50.2 in July, from 50.9 in June.

Growth in Germany's services sector slowed for the second consecutive month in July.

Among individual stocks, Galderma gained 6.7% after L'Oreal said it would acquire a 10% stake in the Swiss skincare firm from a group of major shareholders.

OCI Global jumped 10.3%, after Woodside Energy said it would acquire the Dutch chemicals maker's clean ammonia project in Texas for US$2.35 billion.

  - Reuters