NEW YORK (Reuters) - Stock markets around the world sank on Thursday as the arrest of a top Chinese technology executive threatened to strain an already brittle U.S.-China trade relationship, while oil prices fell after OPEC delayed an output decision.

The arrest of smartphone maker Huawei Technologies Co Ltd Chief Financial Officer Meng Wanzhou in Canada for extradition to the United States came as Washington and Beijing prepared for talks aimed at resolving a bitter trade spat.

Sources familiar with the probe told Reuters Meng was arrested as part of a U.S. investigation of an alleged scheme to use the global banking system to evade U.S. sanctions against Iran.

Wall Street tumbled in early trade before paring some losses by the close.

The Dow Jones Industrial Average fell 79.4 points, or 0.32 percent, to 24,947.67, the S&P 500 lost 4.11 points, or 0.15 percent, to 2,695.95 and the Nasdaq Composite added 29.83 points, or 0.42 percent, to 7,188.26.

The pan-European STOXX 600 index lost 3.09 percent and MSCI’s gauge of stocks across the globe shed 1.05 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.04 percent lower, while Japan’s Nikkei lost 1.91 percent.

“Clearly, the Huawei CFO arrest was the individual catalyst that caused today’s moves lower,” said Mark Hackett, chief of investment research at Nationwide. Canadian authorities late on Wednesday said they had arrested Meng, also the daughter of Huawei’s founder, on Dec. 1, the same day that U.S. President Donald Trump and Chinese leader Xi Jinping met at the G20 summit in Argentina.

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The world’s two economic superpowers had agreed on a 90-day trade truce period to hammer out a more permanent agreement, which sent global stock markets soaring on Monday. Equities reversed course the next day as uncertainty grew that the world’s two largest economies could, in fact, find common ground.

“The potential slowdown in global growth is also something the markets are pricing in,” said Art Hogan, chief market strategist at B. Riley FBR in New York.

Earlier this week, shorter-dated yields rose above medium-dated yields for the first time since early 2008, which fanned fears about a U.S. recession in the coming months and also sent Wall Street shares sliding.

U.S. Treasury yields fell, with 10-year yields hitting three-month lows, as worries about U.S.-China trade and Brexit spurred safe-haven bids.

A U.S. derivatives regulator warned on Thursday that uncertainty over Britain’s exit from the European Union is having a “substantial” impact on some U.S. entities and markets.

Additionally, traders scaled back expectations on the number of rate hikes the Federal Reserve would implement amid weakening economic data and market volatility.

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U.S. jobs data is due on Friday. If the figures show any serious weakness, markets are likely to react, said Shuji Shirota, HSBC’s head of macro economic strategy.

The U.S. dollar fell against major peers on lower Treasury yields and as traders scaled back rate hike expectations.

“The problem for the dollar is really a decline in U.S. yields and fading Fed expectations,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

The euro was 0.26 percent higher against the dollar at $1.1373.

Gold prices, which move inversely with the dollar, held near a five-month peak as the greenback and equities slipped.

Oil prices fell nearly 3 percent in choppy trading after the Organization of the Petroleum Exporting Countries ended a meeting without making a decision on crude output.

OPEC met in Vienna to decide on production policy in coordination with other countries, including Russia, Oman and Kazakhstan. The organization said it had agreed on a tentative deal to cut oil output but had not yet come up with a final figure.

U.S. crude settled down 2.65 percent at $51.49 per barrel and Brent was last at $60.06, down 2.44 percent on the day.