World stocks tumble as China-US jitters set in

World stocks tumble as China-US jitters set in

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SINGAPORE (AP) — European stock markets followed Asia lower Wednesday on expectations that a trade dispute between China and the United States would weigh on global economic growth.

Investors are still digesting U.S. President Donald Trump's comments this week that the U.S. was "not ready" for a trade deal with China.

France's CAC 40 sank 1.6% to 5,227 and Britain's FTSE 100 shed 1.3% to 7,175. The DAX in Germany was down 1.2% at 11,887.

Italy's FTSE MIB tumbled 1.1% to 20,035, after a European Central Bank report sounded the alarm about the country's debt. The report released Wednesday contained a chart showing Italy as an outlier among indebted countries, with high financing needs and low growth.

Wall Street was also heading for losses at the opening bell. The future contract for the S&P 500 index fell 0.6% to 2,789. Dow futures were also 0.6% lower, at 25,214.

In the previous session, traders who felt jittery about long-term growth shifted their money into bonds, putting pressure on yields. The yield on the benchmark 10-year Treasury fell to its lowest level since September 2017.

Earlier this month, China and the U.S. concluded their 11th round of trade talks with no agreement. The U.S. more than doubled duties on $200 billion in Chinese imports. China responded by raising tariffs of 5% to 25% on $60 billion worth of American goods. But it refrained from labeling China or any other country as a currency manipulator in a report to Congress on Tuesday.

The Trump administration has also mounted sanctions on Chinese tech giant Huawei, which is now fighting back in a U.S. court.

Huawei on Wednesday said it filed a motion for summary judgment asking a court in Plano, Texas, to rule on whether a U.S. military spending provision that bars the government and its contractors from using Huawei equipment is constitutional. The world's leader in 5G technology and No. 2 maker of smartphones, Huawei is fighting to maintain its access to major markets for next-generation communications.

Meanwhile, Chinese companies that make rare earths saw their shares jump amid speculation that exports of the materials, which are used in smartphones and mostly mined by China, could be used as a weapon in the trade war with the U.S.

"Until markets see encouraging signs of both sides securing a trade deal, this negative sentiment and general risk aversion will most likely continue punishing global equity markets," Lukman Otunuga of FXTM said in a commentary.

"The negative sentiment isn't restricted to pessimism in equity markets, with a number of other risk assets also tracking losses," he added.

Jingyi Pan of IG said that a private survey of China's economic activity in May, to be released Friday, would give an indication of the initial impact of tariffs on growth.

In Asia, Japan's benchmark Nikkei 225 gave up 1.2% to 21,003.37. The Kospi in South Korea retreated 1.3% to 2,023.32 and Hong Kong's Hang Seng was 0.6% lower at 27,235.71. Australia's S&P/ASX 200 eased 0.7% to 6,440.00.

The Shanghai Composite reversed early losses to edge 0.2% higher to 2,914.70. Stocks fell in Taiwan and Singapore, but advanced in Indonesia.

ENERGY: Benchmark U.S. crude lost $1.29 to $57.85 per barrel. The contract rose 51 cents to $59.14 per barrel on Tuesday. Brent crude, the international standard, fell $1.51 to $67.16 per barrel. It settled 10 cents lower at $68.67 per barrel in the previous session.

CURRENCIES: The dollar weakened to 109.31 yen from 109.36 late Tuesday. The euro dipped to $1.1154 from $1.1161.

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