European shares fell 1.5 per cent today after inflation fears rattled global equity markets and the dollar hit one-year lows, dragging down exporters such as car maker BMW.
Bourses opened down in line with sharp declines in US and Asian markets, which were unsettled by the impact of sustained rises in oil and commodity prices.
However, investors are wondering if this could be the start of the traditional May decline before a quiet summer.
The narrower DJ Euro Stoxx 50 index was 1.5 per cent down while among domestic bourses, France's CAC 40 fell 1.5 per cent and Germany's DAX was down 1.4 per cent.
Britain's FTSE 100 index slipped 88 points or 1.5 per cent to 5,953.4, falling below the 6,000 level for the first time since April 13. The losses followed a 1.5 per cent drop in Tokyo's Nikkei, a 1.2 per cent fall in the Dow Jones industrial average and a 2.1 per cent drop on the Nasdaq.
The drop was the sharpest in nearly four months for US stocks, where a $1 climb in oil prices, a new quarter-century peak for copper and a 26-year high for gold also weighed on sentiment.
German auto stocks BMW, Porsche, Volkswagen and DaimlerChrysler all slipped over 3 per cent with the DJ STOXX European auto sector slipping 3 per cent as traders fretted that the weak dollar would hit US consumers' lust for imported goods.
The dollar fell to a year low of $1.2956 per euro and a year low of 83.61 against an index of currencies.
The impact of high commodity prices was demonstrated by tyre maker Michelin warning it would be more difficult to achieve its financial target for the year because of soaring input costs.
Michelin shares lost 6.3 per cent while German peer Continental fell 2.3 per cent.
Stocks which avoided the sell-off included German steel firm ThyssenKrupp, which rose 1.5 per cent after raising its full-year forecasts following a strong quarterly profit