World stock markets mostly sank Thursday on intensifying recession fears, while oil prices receded after an OPEC decision to proceed with only a limited boost to output. London, Frankfurt, Paris each tumbled more than 2pc in afternoon trading. That followed a largely downbeat performance in Asia, although Shanghai rose after data showed a forecast-beating improvement in China’s services sector on easing Covid restrictions. Wall Street opened lower, with all three major indices shedding more than 1pc. Crude futures fell as major oil producers led by Saudi Arabia and Russia kept to a decision on a limited boost to output despite the risk that high oil prices may help push the global economy into recession. Stock markets are “in a terrible mood across Europe”, said AJ Bell investment director Russ Mould. “There really is a lack of good news for investors to cling onto, and the near-term outlook looks bleak.” The threat of an extended period of elevated inflation and painful interest rate hikes has left traders fretting over the threat of a prolonged economic downturn, while the Ukraine war continues to sow uncertainty. “Recession continues to be the primary concern at the moment… as countries continue to grapple with spiralling inflation and cost-of-living crises,” said Mihir Kapadia, head of Sun Global Investments. The surge in inflation to multi-decade highs has forced central banks to swiftly raise interest rates, dealing a hefty blow to equities as companies faces higher borrowing costs. The Federal Reserve is next month expected to announce a successive 75-basis-point hike in US interest rates. Sweden’s central bank on Thursday announced its biggest hike in 22 years, raising its main rate by 50 basis points to 0.75pc. There had been hope that policymakers would ease off their hikes as economies show signs of slowing, but analysts say some officials are less concerned about a recession than letting prices run out of control. Fed boss Jerome Powell, speaking at a European Central Bank conference Wednesday, hinted again that such hikes could lead to economic contraction. “Is there a risk that we would go too far? Certainly, there’s a risk,” Powell said. “The bigger mistake to make… would be to fail to restore price stability,” he insisted. ECB President Christine Lagarde stated this week that the guardian of the euro would go “as far as necessary” to fight inflation that was set to remain “undesirably high” for “some time to come”. US data released Thursday showed that a key annual inflation measure held steady at 6.3pc in May, but real spending by consumers declined by 0.4pc month-over-month. Briefing.com analyst Patrick O’Hare said the decline “will fuel concerns about the Fed continuing to tighten into a slowing economic environment.”