Fears of a Chinese crackdown send stock markets tumbling.

Following significant drops in Asia, European stock markets have tumbled on concerns that China's Covid restrictions may harm supply chains and the global economy.

Following a tiny outbreak of infections, authorities in Beijing have initiated mass testing in one part of the city.

However, there are fears that the capital would follow Shanghai's lead and impose a lockdown to contain the spread.

Commodity companies such as oil producers and miners led the decline in London's benchmark FTSE 100 stock index.

The FTSE recovered some of its morning losses, but it was still down 1.7 percent in the afternoon. Similar reductions were seen in Germany and France.

The Dow Jones Industrial Average and the S&P 500 both opened lower in the United States.

China's Shanghai Composite Index dropped more than 5% overnight, while Hong Kong's Hang Seng plummeted 3.7 percent.

"The epidemic of Covid continues, with China's zero-tolerance policy unyielding," said Susannah Streeter, Hargreaves Lansdown's senior financial and markets analyst.

"As new incidents emerge in Beijing, there is concern that protracted lockdowns would harm employment and cause a significant slowdown in GDP, as well as causing new shipping bottlenecks and supply chain problems."

Oil prices sank 4.7 percent on Monday, to $101.41 a barrel, on the likelihood of lower demand from China, the world's second-largest economy after the United States.

Oil giants such as BP and Shell saw their share prices fall on Monday. Shares in mining giants such as Anglo American, Glencore, and Rio Tinto were also among the biggest losers in early trading.

Analysis box by Theo Leggett, the business correspondent

Shanghai has been in lockdown for several weeks - but the daily death rate from Covid is rising and there are now thousands of known cases. In Beijing, there has been panic buying, as residents there fear they will soon face hefty restrictions of their own.

With China's "zero Covid" policy under pressure as never before, there are growing concerns about the impact all of this will have on the country's economy. Small wonder, then, that shares in Shanghai and Hong Kong have been tumbling.

The ripple effects are being felt more widely too. Shares in mining companies such as Glencore and Anglo-American have been suffering steep falls; if China's economy loses steam, demand for raw materials will decline - and that will hit their profits.

Then you have the wider background - of continued Covid-related disruption to supply chains; shortages and rising prices linked to the war in Ukraine; and speculation, the US Federal Reserve and other central banks will hike interest rates faster than expected to keep a lid on inflation.

All of this is creating a deeply queasy environment for investors - and weighing heavily on share prices around the world.

A handful of new instances have been reported in Beijing, which has a population of more than 21 million people, but China has a rigorous zero-Covid policy in place. Some Beijing residents were advised over the weekend that they needed to take Covid tests three times a week.

The number of cases in Beijing is projected to rise in the coming days, according to Pang Xinghuo, deputy head of the Beijing Center for Disease Prevention and Control.

In Shanghai, where a new outbreak occurred just a few weeks ago, much of the city has been placed under a lockdown or is subject to restrictions.

Since its discovery in late March, the newest outbreak in Shanghai has resulted in almost 400,000 illnesses and 138 deaths.

Some factories in Shanghai have restarted production with companies such as electric car maker Tesla reportedly requiring employees to work on a "closed-loop" system which means they eat and sleep at the plant.

"Further limitations in China might lead to a poisonous mix of increased inflationary pressure if supply chains in the so-called 'factory of the world' are disrupted, as well as poorer economic development," said Russ Mould, investment director at AJ Bell.

Sharp drops in main US indices at the end of last week influenced stock markets in Europe and Asia, according to analysts, amid predictions of significant US interest rate hikes to calm skyrocketing inflation, which is presently at a 40-year high of 8.5 percent.

The Dow Jones Industrial Average, Nasdaq, and S&P 500 indices all lost 2.5 percent or more on Friday.

The chairman of the US Federal Reserve, Jerome Powell, signaled this week that the central bank may raise the main interest rate by half a percentage point at its next meeting in May.

This would be in addition to a quarter-percentage-point increase in March.

"I believe it is acceptable to be moving a little more quickly," Mr. Powell said, adding that "50 basis points will be on the table."