Europe's main stock markets tumbled Tuesday as oil prices slumped and IMF chief Christine Lagarde offered a bleak outlook for the global economy, dealers said.

Frankfurt's benchmark DAX 30 index slumped 2.6 percent as dire German factory orders also sparked fresh questions about the health of the eurozone's biggest economy.

Elsewhere, France's CAC 40 index shed 2.2 percent, Britain's FTSE 100 dropped 1.2 percent in value and the FTSE-Mib in Milan fell 3.0 percent as Italian banking shares dove.

"A three-week low in the price of oil goes someway to explaining deteriorating market sentiment," said CMC Markets analyst Jasper Lawler.

Meanwhile, International Monetary Fund chief Christine Lagarde said in a speech in Frankfurt that although the global economy wasn't in crisis, the recovery is still "too slow" and "too fragile" in the face of growing risks from a slowdown in China and subdued growth in developing economies.

Lagarde hinted the IMF will cut its current 2016 global growth forecast of 3.4 percent next week when it publishes fresh forecasts at its traditional spring meeting with the World Bank in Washington.

"Her downbeat comments are probably to soften up markets for downgrades in IMF forecasts next week," said Lawler.

The mood darkened as gloomy data showed that German industrial orders -- a key measure of demand for goods in Europe's top economy -- declined in February.

Provisional official data showed a decrease in orders of 1.2 percent month-on-month in February, weighed down by falling foreign demand. That followed an increase of 0.5 percent in January.

Analysts polled by financial services firm FactSet had pencilled in a modest increase of 0.3 percent for February.

"A poor February for German factory orders ... adds to eurozone woes," said analyst Mike van Dulken at traders Accendo Markets.

Meanwhile oil prices pushed lower as the perspective fades of any agreement to reduce the glut of crude on the market from a meeting of top producers later this month.

"As a result it's the natural resources stocks that are scattered across the foot of the index, with Royal Dutch Shell and BP also being dragged very much into the fray."

BP fell 2.1 percent to 337.45 pence and Shell's 'A' shares slid 2.0 percent to 1,644.00 pence.

In Paris, French peer Total saw its stock decline 1.9 percent to 38.43 euros.

- US tightens M&A rules -

US stocks pushes lower Tuesday, with the Dow dropping 0.5 percent in initial trading, as shares in drugmaker Allergan plummeted on new US rules threatening its takeover by Pfizer.

"Allergan and Dow member Pfizer are garnering attention as the US Treasury Department on Monday introduced new rules to possibly threaten their planned $160 billion merger," said market analysts at Charles Schwab.

The US Treasury's new rules aim at stemming the tide of mergers between US and foreign businesses designed to sharply lower the US company's tax bill.

Treasury Secretary Jacob Lew said the toughened regulations target companies moving their headquarters, but not their US operations, to low-tax domiciles abroad via so-called inversion deals.

Allergan and Pfizer have said they would review the impact of the US announcement.

Shares in Dublin-based Allergan plummeted 15.8 percent, although Pfizer gained a modest 1.3 percent after having fallen in overnight trading.

On the upside in Asia on Tuesday, Shanghai stocks jumped on easing Chinese economic worries after Friday's better-than-forecast manufacturing data.

Tokyo stocks tumbled 2.4 percent as the yen moved towards an 18-month high against the US dollar.

- Key figures around 1530 GMT -

London - FTSE 100: DOWN 1.2 percent at 6,091.23 points (close)

Frankfurt - DAX 30: DOWN 2.6 percent at 9,563.36 (close)

Paris - CAC 40: DOWN 2.2 percent at 4,250.28 (close)

EURO STOXX 50: DOWN 2.2 percent at 2,896.84

New York - Dow: DOWN 0.5 percent at 17,652.32

New York - S&P 500: DOWN 0.7 percent at 2,051.49

New York - Nasdaq: DOWN 0.7 percent at 4,859.78

Tokyo - Nikkei 225: DOWN 2.4 percent at 15,732.82 (close)

Shanghai - Composite: UP 1.5 percent at 3,053.07 (close)

Hong Kong - Hang Seng: DOWN 1.6 percent at 20,177.00 (close)

Euro/dollar: DOWN at $1.1380 from $1.1394 on Monday

Dollar/yen: DOWN at 110.30 yen from 111.28 yen