Drew Angerer via Getty Images A trader works at his desk at the closing bell on the floor of the New York Stock Exchange (NYSE), Dec. 17, 2018. The Dow Jones industrial average was down over 500 points for the day at the close on Monday.

LONDON (Reuters) — World stock markets, the U.S. dollar and oil prices tumbled on Tuesday as fears about a slowing global economy gripped investors, just as the U.S. Federal Reserve looks set this week to deliver its fourth interest rate hike of the year. Investor confidence has deteriorated further with more fund managers expecting global growth to weaken over the next 12 months, the worst outlook in a decade, Bank of America Merrill Lynch's December investor survey showed. U.S. stock futures pointed to a firm open for Wall Street a day after U.S. stocks fell to their lowest levels in more than a year, while European equity markets recovered some ground. Watch: U.S. stocks having their worst December since Great Depression. Story continues below.

Still the overall tone remained downbeat, with many investors questioning whether the U.S. Federal Reserve will be able to raise rates much further in the face of turbulent markets and a weakening economy. MSCI's world stock index has fallen 10 per cent this year and is set for its worst year in a decade.

The S&P 500, a broad measure of U.S. stock markets, is almost 8 percent lower in December — heading for its worst month since 2010. "We're facing the biggest December fall in U.S. stocks since 1931 and this is striking and worrying at the same time," said Chris Bailey, European strategist at international financial services firm Raymond James. "We are at a regime shift moment and the debate is how big that regime shift will be." A speech by Chinese President Xi Jinping which investors had hoped could lift morale meanwhile had little impact, with Chinese shares falling over 1 per cent. Japan's Nikkei lost 1.8 percent. In addition, the German Ifo economic institute's business climate index fell for the fourth month in a row to its lowest level in more than two years and Japan's government revised down its economic growth forecasts. On Monday, U.S. President Donald Trump and his top trade adviser stepped up their criticism of the central bank's monetary tightening, raising investor anxiety.

It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory! — Donald J. Trump (@realDonaldTrump) December 17, 2018