Stock markets mostly fell on Wednesday, with commodities-linked assets hit by dollar strength, while the Turkish lira recovered further.

The lira is in recovery mode after tumbling Monday to fresh record lows versus the dollar and euro.

Turkey on Wednesday said it was hiking tariffs on imports of several key US products in retaliation for American sanctions against Ankara, as a bitter dispute between the two allies that had battered the Turkish lira showed no sign of ending.

“European stock markets have steadily slipped into the red since the open, also leading a retreat by Wall Street futures,” noted Ken Odeluga, market analyst at City Index trading group.

“Prospects of a smooth and sustained recovery for emerging market currencies had looked too dicey to Asia-Pacific investors, so markets there mostly fell as well.”

Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, said the Turkey crisis was likely to go on for some time.

“It is hard not to see the lira remaining under pressure until we see a material fiscal restraint to cool down the (Turkish) economy, along with a measurable lift in rates by the central bank and a diplomatic resolution to US tensions,” said the analyst.

The lira had been under pressure for weeks over growing concerns about the health of the economy but the currency slumped on Friday and on Monday, when US President Donald Trump announced Washington was ramping up aluminium and steel tariffs on Turkey.

Traders fret that Turkey’s woes could spark contagion into other emerging currencies and also that banks in advanced nations could suffer due to exposure to the Turkish economy.

Meanwhile with the dollar still strong against the lira and other currencies – the euro hit a June 2017 low Wednesday at $1.1311 – oil prices, metals futures and shares in mining groups were all suffering.

Dollar-denominated “commodity prices have been sliding lower once more, with the rise in the dollar and continued fears over the US-China trade war denting confidence”, said Joshua Mahony, market analyst at IG trading group.

The United States and China have slapped tit-for-tat tariffs on tens of billions of dollars worth of goods from each country, with another round of levies scheduled to being next week.