Riyadh, Oct 15 (IANS): Saudi Arabia threatened on Sunday to hit back if the US were to impose sanctions on Riyadh in the wake of the disappearance of a Saudi journalist, according to the state-run SPA news agency.

US President Donald Trump had warned on Saturday that his administration could severely punish Saudi Arabia, a key US ally, if the kingdom was found responsible for the disappearance and possible murder of Jamal Khashoggi inside the Saudi consulate in Istanbul on October 2, reports Efe news.

"The kingdom affirms its total rejection of any threats and attempts to undermine it whether by threatening to impose economic sanctions, using political pressures or repeating false accusations," the report by SPA said, citing an unnamed official source.

"The kingdom also affirms that if it receives any action, it will respond with greater action," the report added.

Earlier on Sunday, the Saudi stock market plunged nearly seven percent amid fears of imminent US sanctions.

Before Saturday's comments, Trump had been reluctant to criticize Saudi Arabia and had said on Thursday that he was against cancelling the $110 billion US-Saudi arms deal over the journalist's disappearance.

The possible murder of Khashoggi, a US permanent resident in self-imposed exile who had written critically against the Saudi monarchy, has generated a far stronger international backlash against the kingdom than the ongoing Saudi-led war in Yemen, which has caused widespread famine in the already impoverished Arab country.