US and European stocks rebounded Monday, coming off losses fuelled by the US interest rate outlook, while bitcoin sank on news of a Chinese crackdown.

Wall Street pushed higher in late morning trading, with the Dow jumping 1.5 percent after the blue-chip index turned in last week its worst performance since October by tumbling 3.4 percent.

London rose 0.6 percent on the day after UK supermarket group Morrisons rejected a takeover approach.

Frankfurt climbed 1.0 percent and Paris rose by 0.5 percent.

"Fears over an increasingly hawkish Fed appear to have been eased today, with markets throughout Europe and the US on the rise," said market analyst Joshua Mahony at online trading platform IG.

While investors remain concerned about central banks hiking rates and reducing stimulus, on Monday they were "instead focusing on the economic resurgence that looks likely irrespective of whether we see a gradual tightening of conditions over the coming years," he added.

Earlier, Asian equities tumbled on growing expectations the US Federal Reserve will begin lifting interest rates as early as next year to prevent the economic recovery from overheating.

US and European indices had dropped sharply at the end of last week as traders digested the Fed's pivot towards more restrictive policy.

To soothe traders fretting over surging inflation, central bank officials have for months pledged to maintain ultra-loose monetary policies until the rebound was well on track. 

But last week the Fed brought forward its forecasts for tightening.

The news was initially taken broadly in stride by investors as the Fed's so-called "dot plot" outlook for rates suggested it would not begin hiking until 2023, and would discuss winding down its bond-buying programme later this year.

But investors were spooked later by comments from St Louis Federal Reserve President James Bullard that liftoff could come as soon as late 2022.

That sparked hefty losses on Wall Street.

The selling continued Monday in Asia, with Tokyo posting a drop of more than three percent.

Bitcoin slumps 

Meanwhile, bitcoin slumped more than 10 percent at one point after China intensified a crackdown on trading and mining operations. 

The world's most popular digital currency later stood down 4.9 percent at $32,883.70.

Beijing has pulled the plug on the massive bitcoin mines of Sichuan province, in a regulatory assault on the digital currency that has rattled the market.