European stock markets sank Wednesday after U.S. President Donald Trump reportedly raised the stakes in a global trade war with China, dealers said.
London stocks dived one percent, hit also by weak manufacturing data on the eve of a likely UK interest rate hike, while Frankfurt fell 0.5 percent and Paris was flat.
Wall Street edged slightly higher, with the help of Dow member Apple following a stronger-than-expected earnings report.
In a mixed Asia session, Shanghai and Hong Kong both lost ground, despite overnight Wall Street gains.
"European stock markets are largely lower as fears about global trade have crept back into traders' psyches," said CMC Markets UK analyst David Madden.
- 'Sense of confusion' -
"Tensions between the U.S. and China have risen after President Trump threatened to slap a higher tariff on $200 billion worth of Chinese imports," Madden said.
"This is seen as a move by Mr Trump to put pressure on Beijing."
Trump is now considering a 25 percent tariff on $200 billion in Chinese imports, rather than the 10 percent previously touted, reports said Tuesday.
Contradicting reports surrounding the state of U.S.-China trade relations were creating "a sense of confusion across markets, while also possibly desensitizing investors towards global trade developments", said Lukman Otunuga, an analyst at FXTM.
This was weighing on "risk appetite," he said.
The U.S. imposed tariffs of 25 percent on $34 billion of Chinese products earlier this month, with plans to add another $16 billion of imports on Tuesday.
Trump initially threatened to levy 10 percent on an additional $200 billion but that figure may now rise to 25 percent, sources told the Washington Post and Bloomberg.
"The Trump administration has decided to use another aggressive tactic to bring China on the negotiating table," noted ThinkMarkets analyst Naeem Aslam.
In Beijing meanwhile, Chinese foreign ministry spokesman Geng Shuang said Wednesday that "blackmail and pressure from the U.S. side will never work on China."
- BoE rate hike? -
The latest development marks a major ramping up of pressure over Washington's trade standoff with Beijing.
"Yesterday's optimism over progression on U.S.-China talks has fallen short, as China calls out U.S. President Donald Trump for attempting to blackmail the Chinese with threats of further tariffs," added IG analyst Joshua Mahony.
Back in London on Wednesday, the capital's benchmark FTSE 100 index sank on weak manufacturing data and disappointing company earnings on the eve of a likely interest rate hike.
The Bank of England is widely expected Thursday to hike interest rates to combat stubbornly high inflation, as it also eyes potential fallout from both Brexit and the global trade war, economists said.
Policymakers are forecast to increase the British central bank's main interest rate by a quarter-point to 0.75 percent -- which would be the highest level for more than nine years.
- Key figures at 1330 GMT -
London - FTSE 100: DOWN 1.0 percent at 7,674.27 points
Frankfurt - DAX 30: DOWN 0.5 percent at 12,747.12
Paris - CAC 40: FLAT at 5,510.49
EURO STOXX 50: DOWN 0.4 percent at 3,513.19
New York - Dow Jones: UP 0.1 percent at 25,449.27
Tokyo - Nikkei 225: UP 0.9 percent at 22,746.70 (close)
Hong Kong - Hang Seng: DOWN 0.9 percent at 28,340.74 (close)
Shanghai - Composite: DOWN 1.8 percent at 2,824.53 (close)
Euro/dollar: DOWN at $1.1687 from $1.1691 at 2100 GMT
Pound/dollar: UP at $1.3132 from $1.3124
Dollar/yen: UP at 111.94 yen from 111.86 yen
Oil - Brent Crude: DOWN $1.44 at $72.77 per barrel
Oil - West Texas Intermediate: DOWN $1.06 at $67.70
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