Global stocks sank Wednesday as COVID-19 infects the global economic outlook, while oil prices slumped as OPEC-led output cuts were deemed insufficient to soak up a supply glut.

Sentiment turned sour Wednesday on grim warnings over the economic impact of the coronavirus, which emerged in China and has so far killed more than 125,000 people and infected almost two million globally.

The International Energy Agency said 2020 was likely to be "the worst year in the history" of the sector.

The IEA put the drop in demand at 29 million barrels per day in April, far more than a daily cut of 10 million agreed at the weekend by the OPEC oil cartel and its allies.

The benchmark West Texas Intermediate oil contract hit $19.20 per barrel, the lowest level in 18 years.

Investors are "keeping a nervous eye on oil markets, as the price of that commodity renews its drive lower," said market analyst Chris Beauchamp at online trading firm IG.

"There is a growing realisation, as many suspected last week, that short of dramatic cuts in the multiple tens of millions of barrels per day, nothing would be enough..." to stabilise the market.

A bigger than expected rise in US oil stocks didn't help matters.

The drop in oil prices reverberated into stock markets as shares in energy firms took a hit.

Top stock markets across Europe finished more than three percent lower.

Wall Street was also in the red, with the Dow down 2.7 percent in late morning trading, as more banks reported setting aside billions of dollars to cover a wave of expected sour loans.

Sentiment was also shaken by data showing US retail sales tumbled 8.7 percent last month while industrial output fell by 5.4 percent.

The dollar clawed back some ground versus rival currencies, after being slammed earlier this week when the US Federal Reserve announced more cash was on the way to soften the virus' economic impact.

"Much of the ground that European equities have made since mid-March was fuelled by rescue schemes, and more recently, the levelling-off of the rate of infections," said market analyst David Madden at CMC Markets UK.

"But traders are facing up the prospect of a painful economic downturn."

The International Monetary Fund forecast Tuesday that the global economy would shrink by three percent this year and the US economy, the world's biggest, was set to contract by 5.9 percent.

The IMF said it would be the worst global downturn since the Great Depression of the 1930s.

Tokyo's benchmark Nikkei 225 slid as a stronger yen weighed on investor sentiment
Tokyo's benchmark Nikkei 225 slid as a stronger yen weighed on investor sentiment AFP / CHARLY TRIBALLEAU

London - FTSE 100: DOWN 3.3 percent at 5,597.65 points (close)

Frankfurt - DAX 30: DOWN 3.9 percent at 10,279.76 (close)

Paris - CAC 40: DOWN 3.8 percent at 4,353.72 (close)

Milan - FTSE MIB: DOWN 4.9 percent at 16,719.07 (close)

Madrid - IBEX 35: DOWN 3.8 percent at 6,839.50 (close)

EURO STOXX 50: DOWN 3.7 percent at 2,808.54 (close)

New York - Dow: DOWN 2.7 percent at 23,303.62

Tokyo - Nikkei 225: DOWN 0.5 percent at 19,550.09 (close)

Hong Kong - Hang Seng: DOWN 1.2 percent at 24,145.34 (close)

Shanghai - Composite: DOWN 0.6 percent at 2,811.17 (close)

West Texas Intermediate: DOWN 2.4 percent at $19.62 per barrel

Brent North Sea crude: DOWN 7.4 percent at $27.42 per barrel

Euro/dollar: DOWN at $1.0918 from $1.0980 at 2100 GMT

Dollar/yen: UP at 107.40 yen from 107.22

Pound/dollar: DOWN at $1.2523 from $1.2623