A monitor shows stocks decline on the floor of the New York Stock Exchange on 1 October 2019. (AFP)

Stock markets on both sides of the Atlantic took a steep downward turn on Tuesday after a US survey pointed to the weakest manufacturing sector in a decade.

Combined with a tepid inflation reading from the eurozone, and confirmation that British GDP contracted in the second quarter, the figures rekindled fears over worldwide growth.

An index of US manufacturing activity fell to the lowest level since June 2009, according to the Institute for Supply Management, which pointed to trade conflicts as the biggest headwind.

“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,” Timothy Fiore, chair of ISM’s manufacturing survey, said in a statement. “Overall, sentiment this month remains cautious regarding near-term growth.”

The report came as the World Trade Organization on Tuesday cut its 2019 trade growth forecast to 1.2 percent, warning of an economic hit from tensions over international commerce.

“Trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards,” Azevedo said.

And he cautioned that job creation could also be threatened “as firms employ fewer workers to produce goods and services for export.”

Eurozone stocks, which had spent most of the session calmly tweaking portfolios at the start of the final quarter, suffered an abrupt fall to end the day.

Wall Street, which had opened higher, fell quickly into the red and stayed down the rest of the day. Major indices ended down more than one percent.

The ISM report was a “game changer,” said LBBW’s Karl Haeling.

“There’s a growing recognition that the spread of negative economic impulses around the world is starting to land on US shores in a meaningful way.”

Analysts have pointed to upcoming trade talks between Beijing and Washington as critical to the market’s fortunes in the coming period.

Other key potential catalysts include the third-quarter corporate earnings period and upcoming Federal Reserve meetings that could lead to lower interest rates.

Among individual companies, General Motors dropped 3.7 percent as a United Auto Workers strike further pinched operations.

The company announced it will furlough 6,000 workers in Mexico due to the strike, while JPMorgan Chase estimated the strike has cost the company around $1 billion so far. Workers in Canada also were laid off temporarily.

Shares of online brokerage firms plunged after Charles Schwab announced plans to eliminate commissions for many trades. Schwab fell nearly 10 percent, while Etrade sank 16.4 percent and TD Ameritrade nosedived 25.8 percent.

US-listed shares of Credit Suisse dropped 2.7 percent following the resignation of chief operating officer Pierre-Olivier Bouee after an internal investigation into the bank’s decision to spy on a star banker who left for rival UBS.

An internal probe exonerated chief executive Tidjane Thiam in the scandal, which has shaken the bank in recent weeks.