Chinese equities suffered one of their worst days of the year on Monday, leading a decline in Asian markets that rippled into Europe and the US as trade war fears dominated the start of the second half.

The CSI 300, a key index of big stocks listed in Shanghai and Shenzhen, closed down 2.9 per cent in its fifth-sharpest daily decline this year, according to Reuters data. Japanese and South Korea bourses both ended down more than 2 per cent, while the Europe-wide Stoxx 600 was almost 1 per cent weaker.

The potential economic damage a global trade war would cause has shot to the top of investors’ concerns over the past month. On Sunday, the Financial Times reported that the European Commission warned that President Donald Trump’s threat to impose tariffs on car imports risked global retaliation against as much as $300bn of US products.