US stocks rebounded in choppy trading today, as strong July retail sales data and Walmart's upbeat results eased some fears about the economy slipping into recession.

The volatility continued in Europe with stock markets closing mainly in the red having swung between gains and losses for much of the day.

London's FTSE 100 index fell to a six-month low. The Dax in Frankfurt and the Cac in Paris also closed lower.

An early bounce on Wall Street came a day after the blue-chip Dow index posted its worst day this year, as recession fears gripped the market following the inversion of the US Treasury yield curve for the first time in 12 years.

"It doesn't matter where we are right now. The number of variables affecting this market are increasing," Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey said.

The Commerce Department said retail sales rose 0.7% in July, well above expectations of a 0.3% rise, as consumers bought a range of goods even as they cut back on motor vehicle purchases.

"The July number shows that the weakest economic data that people keep pointing out to for a global slowdown is coming from outside the US, not inside the US," Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin.

Walmart shares rose 5.3% after the retailer reported second-quarter US comparable sales that beat estimates and boosted its earnings forecast for the year.

Keeping investors on edge were mixed reports on trade with China's finance ministry saying it would retaliate against the latest US tariffs.

However, a spokeswoman for the ministry later said, "We hope the US will meet China halfway, and implement the consensus of the two heads of the two countries in Osaka."

Trade worries have plagued financial markets for at least a year, fuelling fears of recession and prompting traders to raise their bets on three rate cuts this year, including one in September.

The benchmark S&P 500 is now about 6% away from its all-time high hit in July.