A Chinese ship, left, shoots water cannon at a Vietnamese vessel, right, while a Chinese Coast Guard ship, center, sails alongside in the South China Sea, off Vietnam's coast, Wednesday. Pic: AP.

HANOI, Vietnam (AP) — A visiting U.S. official called on Vietnam and China to practice restraint in their standoff over Beijing’s oil rig in the disputed South China Sea, warning that the global economy was too fragile to deal with conflict.

In a sign of the jitters, Vietnam’s main stock market index recorded its biggest one-day drop since 2001 on Thursday.

(MORE: Vietnam’s appeasement policy in South China Sea backfires)

On Wednesday, Vietnam said Chinese ships escorting a giant oil rig close to the Paracel Islands had repeatedly rammed Vietnamese vessels in the most serious incident between the two countries in years.

U.S. State Department official Daniel Russel urged both sides to “refrain from unilateral actions.”

He told reporters that the global economy was “too fragile to brook the possibility of a crisis that could escalate into conflict.”