NEW YORK (Reuters) – Global equity markets slumped on Tuesday, denting the recent recovery in riskier assets as oil prices tumbled on signs that a proposed deal to freeze output by major producers was not on the horizon.

After gains of more than 5 percent on Monday, which had helped push a gauge of world equities up more than 1 percent, both Brent and U.S. crude turned sharply lower after Saudi Oil Minister Ali Al-Naimi said he welcomed all sources of supply, while Iran was seen as unlikely to agree to an output cap.

The decline in crude weighed on both the energy and financial sectors on Wall Street. Concerns about bank exposure to the energy sector were highlighted by JP Morgan’s announcement that it will put aside an additional $500 million to cover potentially bad loans to energy companies.

Markets have been closely tethered to oil prices, which have been volatile based on the continually changing perceptions that an output deal could be reached.

“The markets are really worried that we are missing something here – that the global slowdown may be more significant than we are recognizing and that slowdown could be causing oil prices to drop,” said Tracie McMillion, head of asset allocation at Wells Fargo Private Bank in Winston-Salem, North Carolina.

U.S. crude futures settled down 4.6 percent at $31.87 a barrel and Brent settled 4.1 percent lower at $33.27 a barrel. The commodity had shown signs of stabilization above $30 a barrel recently on hopes a production freeze by major producers could be agreed upon.

The Dow Jones industrial average fell 188.88 points, or 1.14 percent, to 16,431.78, the S&P 500 lost 24.23 points, or 1.25 percent, to 1,921.27 and the Nasdaq Composite dropped 67.02 points, or 1.47 percent, to 4,503.58.

European shares also moved lower on the crude weakness, along with and disappointing updates from Standard Chartered, down 6.7 percent, and BHP Billiton, down 6.1 percent. A weak sentiment reading of German manufacturers also raised concerns about the health of the region’s largest economy.

Resources stocks, down 3.2 percent, weighed heavily on European equity indices after the world’s largest miner, BHP Billiton, posted its first loss in 16 years.

The pan-European FTSEurofirst 300 index of leading shares closed down 1.3 percent. MSCI’s index of world shares was lost 0.92 percent.

In currency markets, the British pound remained under pressure, and was down 2.7 percent on the past two sessions, its biggest two-day drop in six years, on worries Britain may leave the European Union. Sterling was last down 0.83 percent at 1.403.

The euro also fell to $1.0987 on Monday, its lowest in almost three weeks, on fears Brexit could undermine the European Union. It was last down 0.13 percent at $1.1012.

Investors’ shift towards safer ground on Tuesday pushed the dollar lower against the yen, down 0.7 percent to 112.10 yen after hitting a low of 111.75.

The dollar’s index against a basket of six major currencies was little changed, up 0.09 percent at 97.467

Benchmark 10-year U.S. Treasuries reversed earlier losses and were last up 8/32 in price to yield 1.7380 percent.

(Editing by Nick Zieminski)