On Wall Street, the Dow Jones Industrial Average fell 76.15 points.

Global equity markets fell on Monday as a US crackdown on China's Huawei Technologies led chipmaker stocks in Europe and on Wall Street to slide on fears of a widening trade war, while the dollar was steady before this week's Federal Reserve meeting.

Asian shares managed to reverse some of last week's losses after Washington said it would lift tariffs in North America, but fresh Chinese trade comments sank that sentiment.

China accused the United States of harboring "extravagant expectations" for a trade deal, underlining the gulf between the two sides as the US action last week against Huawei began to hit the global tech sector.

Alphabet Inc's Google suspended some business with Huawei, Reuters reported, and Lumentum Holdings Inc, a major supplier of Apple Inc's face ID technology, said it had discontinued all shipments to Huawei.

German chipmaker Infineon said it has continued most shipments to Huawei, denying a report in Japan's Nikkei daily that it had suspended deliveries to the Chinese firm.

Technology stocks are a big driver of equity market returns so concerns about a slowdown in the sector weigh on investor sentiment, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

"The volatility that we're seeing today is a direct result of President Trump's threats to Huawei," Arone said. "The challenge is, there are no near-term trade meetings to provide a positive catalyst to this discussion," he said.

Apple's shares fell 3.0 per cent, Lumentum Holdings fell 2.46 per cent, Infineon lost 4.56 per cent and Franco-Italian chipmaker STMicroelectronics tumbled 9.18 per cent.

The PHLX Semiconductor Index of 30 US industry-related companies fell 3.28 per cent.

Shares of Sprint Corp and T-Mobile US Inc jumped after they announced changes to their proposed $26 billion merger, while US regulators were expected to announce an agreement on the conditions necessary to approve the deal, sources said.

Sprint surged 24.19 per cent and T-Mobile gained 5.49 per cent.

The pan-European STOXX 600 index lost 1.04 per cent and MSCI's gauge of stocks across the globe shed 0.39 per cent.

On Wall Street, the Dow Jones Industrial Average fell 76.15 points, or 0.3 per cent, to 25,687.85. The S&P 500 lost 12.85 points, or 0.45 per cent, to 2,846.68 and the Nasdaq Composite dropped 95.13 points, or 1.22 per cent, to 7,721.15.

The dollar was little changed but maintained last week's gains as investors held off on big moves while awaiting developments in U.S-China trade negotiations and for insight on the Fed's thinking on interest-rate policy.

The dollar index fell 0.08 per cent, with the euro up 0.12 per cent to $1.1169. The Japanese yen weakened 0.09 per cent versus the greenback at 109.96 per dollar.

US Treasury yields slipped, with long-dated debt falling for a second straight session as risk appetite diminished amid the ongoing US-Sino trade tensions.

Volume was generally light, with very little economic data scheduled this week. The highlight is expected to be the release on Wednesday of the Fed's minutes from its last monetary policy meeting. Analysts do not expect surprises from the minutes.

The benchmark 10-year US Treasury note fell 2/32 in price to yield 2.3997 per cent.

Huawei, the world's largest telecoms equipment maker, was officially added to a trade blacklist by the Trump administration on Thursday, escalating the already bitter trade war, while China on Monday accused the United States of harboring "extravagant expectations" for a trade deal.

Oil prices rose to multi-week highs as the Organization of the Petroleum Exporting Countries indicated it was likely to maintain production cuts that have helped boost prices, while escalating Middle East tensions provided further support.

Brent crude futures rose 38 cents to $72.59 a barrel and US West Texas Intermediate crude futures gained 56 cents to $63.32 a barrel.