By Agence France-Presse
London stocks dived by over one percent, hit also by weak manufacturing data on the eve of a likely UK interest rate hike, while Frankfurt and Paris showed smaller losses at the closing bell.
Wall Street gave up early gains and finished mostly lower, even as strong Apple earnings lifted the Nasdaq.
In a mixed Asia session, Shanghai and Hong Kong both lost ground, despite overnight Wall Street gains. The Nikkei rose following a round of strong earnings by Japanese companies.
"European stock markets are largely lower as fears about global trade have crept back into traders' psyches," said CMC Markets UK analyst David Madden.
'Sense of confusion'
"Tensions between the US and China have risen after President Trump threatened to slap a higher tariff on $200 billion worth of Chinese imports," Madden said.
"This is seen as a move by Mr. Trump to put pressure on Beijing."
Trump is now considering a 25 percent tariff on $200 billion in Chinese imports, rather than the 10 percent previously planned, according to the latest reports, which come on the heels of earlier stories suggesting the two parties were resuming talks.
The fast-changing accounts of US-China trade relations were creating "a sense of confusion across markets, while also possibly desensitizing investors towards global trade developments", said Lukman Otunuga, an analyst at FXTM.
This was weighing on "risk appetite", he said.
"The Trump administration has decided to use another aggressive tactic to bring China on the negotiating table," noted ThinkMarkets analyst Naeem Aslam.
In Beijing meanwhile, Chinese foreign ministry spokesman Geng Shuang said Wednesday that "blackmail and pressure from the US side will never work on China."
- BoE rate hike? -
Back in London on Wednesday, the capital's benchmark FTSE 100 index sank on weak manufacturing data and disappointing company earnings on the eve of a likely interest rate hike.
The Bank of England is widely expected Thursday to hike interest rates to combat stubbornly high inflation, as it also eyes potential fallout from both Brexit and the global trade war, economists said.
Policymakers are forecast to increase the British central bank's main interest rate by a quarter-point to 0.75 percent -- which would be the highest level for more than nine years.
Oil prices finished sharply lower following a surprising rise in US crude stockpiles amid fear that trade fights will economic growth.
Key figures at 2030 GMT
New York - Dow Jones: DOWN 0.3 percent at 25,333.82 (close)
New York - S&P 500: DOWN 0.1 percent at 2,813.36 (close)
New York - Nasdaq: UP 0.5 percent at 7,707.29 (close)
London - FTSE 100: DOWN 1.2 percent at 7,652.91 (close)
Frankfurt - DAX 30: DOWN 0.5 percent at 12,737.05 (close)
Paris - CAC 40: DOWN 0.2 percent at 5,498.37 (close)
EURO STOXX 50: DOWN 0.5 percent at 3,509.23 (close)
Tokyo - Nikkei 225: UP 0.9 percent at 22,746.70 (close)
Hong Kong - Hang Seng: DOWN 0.9 percent at 28,340.74 (close)
Shanghai - Composite: DOWN 1.8 percent at 2,824.53 (close)
Euro/dollar: DOWN at $1.1659 from $1.1691 at 2100 GMT
Pound/dollar: FLAT at $1.3124
Dollar/yen: DOWN at 111.62 yen from 111.86 yen
Oil - Brent Crude: DOWN $1.82 at $72.39 per barrel
Oil - West Texas Intermediate: DOWN $1.10 at $67.66 per barrel