Growing uncertainty about global economic growth could lead to "bouts of high volatility" in financial markets, the European Central Bank (ECB) warned Wednesday.

In its Financial Stability Review (FSR), which provides an appraisal of potential risks to stability in the euro area, the ECB cautioned that weaker-than-expected growth and a possible escalation of trade tensions could trigger further falls in asset prices.

Global stocks have gone through periods of heavy selling on the back of an escalating trade war between the U.S. and China. The Dow Jones Industrial Average index and the are down more than 4.6% and 4% respectively since the start of this month. Meanwhile, the pan-European Stoxx 600 is down 5.2% for the month of May.

Speaking to CNBC's Annette Weisbach following the release of the report, Luis de Guindos, vice president of the ECB, said a full-blown trade war between the U.S. and China would be "extremely detrimental," adding that "it could affect not only the volatility of markets, it could affect the real economy quite rapidly."

He said that within the context of the current global economic slowdown, escalating trade tensions would be "very negative news" for the global economy.

In March, the euro zone's central bank slashed its growth forecast for 2019 to 1.1% from an earlier forecast of 1.7% made in December 2018. ECB President Mario Draghi said at the time that there had been a "sizable moderation in economic expansion that will extend into the current year."

Luke Hickmore, a senior investment director at Aberdeen Standard Investments, told CNBC's "Street Signs Europe" Wednesday that the findings from the new report were "not actually a bad situation."

"The ECB are doing exactly what you'd hope they'd do — they're warning you about risks, but you're getting well paid for a lot of those risks if you're in credit markets," he said, adding that within the credit landscape "there are lots of attractive opportunities around European banks, with a few risks."