Tokyo, Aug 26 (AP) Shares sank Tuesday in Europe and Asia after President Donald Trump announced he was firing Federal Reserve Governor Lisa Cook.

The announcement came after trading closed Monday on Wall Street, where benchmarks reversed some of their big gains from notched last week on hopes for interest rate cuts from the Fed.

Trump said in a letter posted Monday on his Truth Social platform that he was removing Cook because of allegations that she committed mortgage fraud.

It's an unprecedented move that marks a sharp escalation in Trump's battle to exert greater control over what has long been considered an institution independent from day-to-day politics. Apart from rattling financial markets, it is likely to touch off an extensive legal battle that will probably go to the Supreme Court.

“Trump's decision to remove a sitting Fed governor has shaken confidence in the institution that underpins the world's financial system," Nigel Green of the financial advisory deVere Group, said in a commentary.

“Investors are reacting because the independence of the central bank is critical to market stability, and any sign of political capture raises alarm bells everywhere.” In early European trading, the DAX lost 0.9% to 24,065.00, while the CAC 40 in Paris slumped 2.1% to 7,678.79. Britain's TFSE 100 gave up 0.7% to 9,262.22.

The future for the S&P 500 lost 0.3% while that for the Dow Jones Industrial Average lost 0.4%.

In Asian trading, most benchmarks declined.

Japan's benchmark Nikkei 225 dove nearly 1.0% to finish at 42,394.40. Australia's S&P/ASX 200 declined 0.4% to 8,935.60.

South Korea's Kospi lost 1.0% to 3,177.82 after data showed improved consumer sentiment, strengthening expectations that the central bank won't lower interest rates.

Hong Kong's Hang Seng shed 1.1% to 25,550.41, while the Shanghai Composite slipped 0.4% to 3,868.38.

On Monday, the Wall Street, the S&P 500 fell 0.4%. The Dow industrials closed 0.8% lower and the Nasdaq composite shed 0.2%.

Selling was widespread, with health care stocks among the biggest drags on the market. Pfizer fell 2.9% and Eli Lilly and Co slid 2.3%.

Gains for several big technology stocks helped temper the market's losses. Alphabet, Google's parent company, rose 1.2%. Technology heavyweight Nvidia rose 1%.

Treasury yields rose in the bond market following their big drop on Friday amid expectations that the Fed will cut its benchmark interest rate in September.

The yield on the 10-year Treasury rose to 4.28% from 4.25% late Friday. The two-year Treasury yield rose to 3.73% from 3.70% late Friday.

Trump has repeatedly attacked the Fed's chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him.

Wall Street is still overwhelmingly betting that the Fed will cut interest rates at its next meeting in September. Traders see an 84% chance that the central bank will trim its benchmark rate by a quarter of a percentage point, according to data from CME Group.

In energy trading, benchmark US crude lost 52 cents to $64.28 a barrel. Brent crude, the international standard, declined 48 cents to $67.74 a barrel.

In currency trading, the US dollar edged up to 147.70 Japanese yen from 147.77 yen. The euro was unchanged at $1.1620. (AP) SCY SCY