Stock markets across Europe and Asia on Tuesday mostly extended recent sharp losses on lingering worries about possible recession for major economies.

Panic has swept through trading floors since data on Friday showed US consumer prices rising at their fastest pace in decades on surging energy and food costs caused by the Ukraine war and supply chain snarls.

The pain has been felt across all assets, with bitcoin threatening to fall below $20,000 for the first time since December 2020, currencies retreating against the dollar, and safe havens including the yen and gold feeling the squeeze.

Investors are bracing for the Federal Reserve's interest rate decision Wednesday as it struggles to walk a fine line between reining in inflation and trying to keep the economy on track.

"While there is no doubt that inflation is a considerable challenge for the US at this point, slamming on the brakes too hard risks pushing the economy off its track," said Tai Hui of JP Morgan Asset Management. 

Fears that the world's top economy is heading for a recession sent Wall Street plunging Monday, with the broad-based S&P 500 stocks index sinking into a bear market after dropping more than 20 percent from its recent peak.

Elsewhere, data Tuesday confirmed annual inflation in Germany, Europe's biggest economy, hit a record 7.9 percent in May.

It comes as confidence among German investors remains subdued despite picking up for the second month in a row.

The ZEW institute's economic expectations index climbed in June by 6.3 points to minus 28 points compared with May, but it is still well below pre-pandemic levels.

"The economy is still exposed to numerous risks, such as the effects of the sanctions against Russia, the unclear pandemic situation in China and the gradual change of course in monetary policy," said ZEW president Achim Wambach.

On the upside, UK transport giant Go-Ahead saw its share price surge after the group agreed to a takeover from a global consortium.

Shares in Go-Ahead, which operates London's famous red buses on behalf of the capital's transport authority, jumped 14 percent to £15.50 ($18.75).