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European stock markets opened in the red on Wednesday after U.S. economic data prompted traders to ramp up Federal Reserve rate hikes bets, pushing the dollar to a 24-year high against the Japanese yen.

U.S. Treasury yields jumped and the dollar received a boosted by data on Tuesday which showed the U.S. services industry picked up in August, reinforcing expectations for aggressive Fed rate hikes. Markets were pricing in a 73% chances of a 75 basis point hike at the Fed's next meeting.

Markets took a further hit in Asian trading from data showing China's export growth slowed in August. MSCI's broadest index of Asia-Pacific shares outside Japan fell to its lowest since mid-2020.

China's exports and imports lost momentum as surging inflation crippled overseas demand and new COVID curbs and heatwaves disrupted output, reviving downside risks for the shaky economy.

“Government bond yields across the board are rising and that's putting pressure on stock markets," said David Madden, market analyst at Equiti Capital.

"This also comes at a time when there’s increasing fears of the global economy slowing down and bond traders are predicting more rate hikes."

At 0808 GMT, the MSCI world equity index was down 0.3% on the day, while Europe's STOXX 600 was down 0.4%.

London's FTSE 100 was down 0.7%.

The U.S. dollar index was around 110.24, having hit a 20-year high of 110.69 earlier in the session.

The 10-year U.S. Treasury yield hit its highest since mid-June at 3.365%, before easing slightly.

"I wouldn't be surprised if the Fed starts to get a bit concerned about the strength of its domestic currency," said Equiti's David Madden, who said a strong dollar could have a negative impact on U.S. exports.

The Japanese yen was at 144.015 versus the U.S. dollar, having hit its weakest since August 1998 at 144.38 yen per dollar. Japan's government said it wants to act if "rapid, one-sided" moves in the currency market continue.

The Chinese yuan sank to a two-year trough, closing in on the psychologically important 7 per dollar mark despite steps by authorities to stem its decline.

Euro zone government bond yields rose in early trading, ahead of an expected 75 basis-point rate hike from the European Central Bank on Thursday.

The euro was up 0.2% at $0.9925.

The British pound was a touch lower at $1.15045. Liz Truss, who took over as Britain's prime minister on Tuesday, vowed immediate action to help the economy, which faces double-digit inflation and an expected lengthy recession.

Showing correlation with mainstream financial markets, cryptocurrency bitcoin touched its lowest since mid-June and the market cap of all cryptocurrencies fell below $1 trillion, according to data provider CoinGecko.

The Bank of Canada is expected to announce a large rate hike later on Wednesday as it battles to curb inflation at its highest in nearly four decades.

As Europe grapples with surging energy prices, market-watchers are waiting for a meeting of European Union energy ministers on Friday.

Gas prices jumped on Monday after Russia said its Nord Stream 1 pipeline would stay shut.