Global stocks and oil markets tanked Thursday but the dollar rallied versus some key rivals after the US Federal Reserve signalled it could rein in vast stimulus measures this year.

Sentiment was hammered also by the rapid global spread of the coronavirus Delta variant, signs of Chinese economic weakness and the Taliban's takeover of Afghanistan.

AJ Bell investment director Russ Mould pointed to "a cocktail of worries" across financial markets.

"The question now is whether a volatile week is the prelude to the kind of late summer sell-off we have seen in previous years."

In late morning deals, Paris' main stocks index briefly tumbled 3.0 percent before paring losses, with the luxury sector hit by demand worries amid concerns especially over China's stumbling economic recovery.

The Frankfurt and London indices also slid, mirroring Asia's weak performance after a second straight day of losses on Wall Street.

Minutes from the Fed's most recent July gathering showed most board members agree on tapering monetary policy in the next few months, sending shockwaves reverberating across trading floors.

Stronger dollar

The dollar however strengthened against the euro and pound on talk of tapering being followed by higher US interest rates, according to analysts.

The rising US unit weighed on dollar-priced oil, which slumped by more than 3.0 percent also on weaker demand expectations amid rising virus fears, notably in commodities-hungry China.

"Concerns about dampening demand expectations as a result of an increase in coronavirus cases worldwide have contributed to the drop" in oil, said AvaTrade analyst Naeem Aslam.

"The rise in the dollar... has added to the downside pressure."

And after chalking up record highs on numerous occasions in recent weeks, New York's main stocks indices ended in the red again Wednesday after most Fed members agreed on tapering monetary policy in the next few months.

It comes as a string of data shows the world's top economy well on the road to recovery.

"Nerves are clearly rising around the Delta variant and the timing of the Fed's taper, but I don't think we learned anything from the minutes on Wednesday that warrants" the big sell-offs, said Oanda analyst Craig Erlam, adding they simply confirmed market expectations.