LONDON: Global stock markets fell Tuesday, as China-US trade talk euphoria faded, with London also sliding as the British pound rallied on speculation over a possible Brexit delay.

Markets had hurtled higher Monday after US President Donald Trump said he would delay a hike in tariffs on Chinese goods and described the two countries as being in "advanced stages" of negotiations towards a deal.

However, as the dust settled on Tuesday, doubts festered over whether Beijing and Washington can resolve their bitter trade war.

"Stocks have handed back some of yesterday's gains as the optimism surrounding US-China trade relations has faded," said CMC Markets analyst David Madden.

"It was a welcome relief that the US won't be implementing higher tariffs on Chinese imports in March, but the trade spat is far from over -- and investors are wondering: where do we go from here?"

Trump's decision to waive this week's deadline for China-US negotiations and his upbeat tone on their progress had lit a fire under equities Monday on hopes the long-running dispute could be nearing its end.

- Building Brexit tensions -

In London on Tuesday, sterling rose on a report that Prime Minister Theresa May was considering putting off the March 29 deadline for Britain to leave the European Union if she is unable to push her own deal through parliament, as she attempts to avoid a painful no-deal divorce.

In reaction, the pound leapt to $1.3238 -- the highest level since October.

And the European single currency touched a 21-month peak at 85.88 pence per euro.

"The FTSE is losing ground ... as a stronger pound is hitting major industrials and a prospect of a delay in Brexit is adding to the uncertainty for businesses," said City Index analyst Fiona Cincotta.

"Brexit tensions that have been building over the last couple of weeks with party defections and the formation of the group of independent MPs seem to have yielded some results."

The stronger pound weighs on FTSE-listed multinationals whose earnings abroad are converted back into sterling.

Adding upside to sterling was the announcement by opposition leader Jeremy Corbyn that his Labour Party would support a second referendum on leaving the bloc if its own plan for Brexit is not approved.

Later on Tuesday, all eyes will be on Washington, where Federal Reserve boss Jerome Powell will face lawmakers, with his comments being pored over for clues about the central bank's monetary policy plans.

- Key figures around 1100 GMT -

Pound/dollar: UP at $1.3210 from $1.3097

Euro/pound: DOWN at 85.98 pence from 86.72 pence

Euro/dollar: DOWN at $1.1357 from $1.1358 at 2200 GMT

Dollar/yen: DOWN at 110.86 yen from 111.06 yen

London - FTSE 100: DOWN 1.2 percent at 7,099.29 points

Frankfurt - DAX 30: DOWN 0.1 percent at 11,489.12

Paris - CAC 40: DOWN 0.3 percent at 5,217.38

EURO STOXX 50: DOWN 0.2 percent at 3,272.37

Tokyo - Nikkei 225: DOWN 0.4 percent at 21,449.39 (close)

Shanghai - Composite: DOWN 0.7 percent at 2,941.52 (close)

Hong Kong - Hang Seng: DOWN 0.7 percent at 28,772.06 (close)

New York - Dow: UP 0.2 percent at 26,091.95 (close)

Oil - Brent Crude: UP 50 cents at $65.26 per barrel

Oil - West Texas Intermediate: UP 13 cents at $55.61