MILAN (Reuters) – European shares tumbled on Tuesday after a sell-off on Wall Street, with oil stocks leading the drop as crude prices extended their losses and Royal Dutch Shell (RDSa.AS) fell after reports of a possible acquisition.

The pan-European STOXX 600 index was down 0.6 percent by 0857 GMT, getting closer to the two-year lows hit last week, as concern mounted over slowing economic growth.

A speech by Chinese President Xi Jinping that investors had hoped could lift morale had no impact. Attention shifted to the Federal Reserve, which is almost certain to raise interest rates at the end of its two-day meeting on Wednesday.

Traders will be watching the Fed’s projections for future rate increases, which could boost equities.

The STOXX 600 is down more than 12 percent so far this year and on course for its fourth straight month of declines, dragged down by a slowing economy and political instability in Europe.

“The missing ‘Santa Rally’ is becoming more and more an unexpected ‘Santa Crash’ with epicenter in the United States,” said JCI Capital fund manager Alessandro Balsotti.

The S&P 500 .SPX hit a 14-month low on Monday, having fallen more than 6 percent so far in December.

On Tuesday, almost all sectors in Europe were trading in the red. Oil stocks fell to their lowest in more than eight months as concern over oil demand amid weakening global economic growth sent crude prices down 2 percent.

Norway’s Aker BP (AKERBP.OL) declined 5.1 percent to lead losers on the STOXX. BP (BP.L) and Total (TOTF.PA) both fell more than 1 percent. Shell fell 1.8 percent after Bloomberg reported it was in talks to buy Endeavor Energy Resources LP for around $8 billion.

Deutsche Telekom (DTEGn.DE) rose at the open after its unit T-Mobile and Sprint won backing from two U.S. national security reviews for their $26 billion merger. The go-ahead came after indications that both groups had offered to stop using Huawei [HWT.UL] equipment.

Shares in the German phone group pared gains to fall 0.7 percent.

Telecoms equipment suppliers Ericsson (ERICb.ST) and Nokia (NOKIA.HE) fell 1 percent and 1.3 percent respectively. Traders cited a report that Huawei would be allowed to enter 5G trials in India.

Among the few gainers was Getlink (GETP.PA), up 5 percent after French builder Eiffage (FOUG.PA) bought a 5 percent stake in the company, which operates the Channel Tunnel between France and Britain.

Cherry (CHERb.ST) shot up 18.3 percent after a consortium led by British private equity firm Bridgepoint made a $1 billion cash takeover offer for the Swedish gaming firm.

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