FRANKFURT: European shares slid on Wednesday as escalating US-China tensions and a surge in coronavirus cases dented sentiment after an EU-wide debt deal sent the region's markets to four-month highs in the previous session.

Breaking a three-day winning streak, the pan-European STOXX 600 closed down 0.9% to post its sharpest one-day drop in a month.

Beijing said Washington had abruptly told it to close its consulate in the city of Houston, a move strongly condemned by China. In response, the Asian country is considering closing the US consulate in Wuhan, a source said.

Energy stocks took the biggest hit, down 2.8% after data showed a bigger-than-expected inventory build-up in the United States, adding to the pressure on oil prices. Royal Dutch Shell, BP and Total SA dropped more than 3%.

Healthcare stocks marked their worst session in a month, while China-sensitive basic material stocks lost 1.4%.

In earnings, UK home improvement chain Kingfisher had its best day in more than three decades, up 14.6%, after it forecast first-half underlying profit ahead of last year.

Swiss engineering firm ABB Ltd rose 2.8% after saying its order situation could improve in the coming months.

Industrial group Melrose Industries, meanwhile, dropped 14.2% after it signalled it could lay off an unspecified number of employees following losses in the second quarter. Automakers were hit by a 1.3% slide in French car parts maker Valeo SA after it swung to a 1.2 billion euros first-half loss.