European, U.S. Equities Retreat as Global Fears Resurface
European and U.S. stock markets moved lower Friday on investor concerns over Turkey and the ongoing trade war between China and the United States.
Asian stocks however rallied after a positive lead from Wall Street overnight, with dealers cautiously optimistic about upcoming U.S.-China trade talks -- although worries festered over the future for emerging markets as a whole.
The rebound in the Turkish lira has been cut short by new threats by Ankara and Washington to impose more sanctions as the dispute over a jailed American pastor shows no sign of being resolved.
"Global trade worries have not disappeared ... as market participants prefer to regroup and strategize in this unorthodox U.S. trade and foreign policy environment," said OANDA analyst Dean Popplewell.
"Emerging market worries are not going away any time soon."
- Further volatility ahead? -
In Europe, London stocks were down 0.4 percent in afternoon trading, with Paris dropping 0.5 percent and Frankfurt shedding 0.7 percent.
Wall Street opened lower, with the Dow slipping 0.05 percent in the first minute of trading.
"For now, the possibility of a Sino-U.S. trade deal has brought some calm to the market -- but trade and currency wars remain," said Popplewell.
Negotiators from Washington and Beijing will meet later this month for the first publicly announced dialogue in weeks on their bitter trade dispute, which has seen both sides impose reciprocal tariffs on goods worth $34 billion.
The news helped global markets regain composure after several days of volatility sparked by fears that Turkey's financial crisis could infect other economies.
"Markets are optimistic but remain wary," said FXPro analyst Alexander Kuptsikevich.
"It is worth noting that the status of officials involved in the (U.S.-China) negotiations is not very high, which eliminates the possibility of breakthrough decisions in the near future."
Tit-for-tat tariffs by the U.S. and China on another $16 billion of each other's goods are due to kick in next week, and President Donald Trump has threatened to go after even more Chinese imports in the future.
- Lira 'not out of woods yet' -
Meanwhile, most commentators do not expect that the end is in sight to the Turkish currency saga.
"Concerns over the China-US trade dispute and the state of the Turkish lira remain undispelled," said City Index analyst Fiona Cincotta.
While the Turkish lira had clawed back most of its losses on Friday and Monday, after shedding 20 percent of its value against the dollar, it began falling again on the new sanctions threats, dropping by five percent.
Turkey on Friday vowed to respond if the United States followed through on its threat to levy further sanctions if does not release the American pastor being held on terror charges.
"The currency is not out of the woods yet and sellers are pushing to see at which level it will hold," said Cincotta.
- Key figures around 1330 GMT -
New York - Dow Jones: DOWN 0.05 percent at 25,547.10 points
London - FTSE 100: DOWN 0.4 percent at 7,523.29
Frankfurt - DAX 30: DOWN 0.7 percent at 12,153.15
Paris - CAC 40: DOWN 0.5 percent at 5,322.94
EURO STOXX 50: DOWN 0.5 percent at 3,360.12
Dollar/Turkish lira: UP at 6.1245 lira from 5.8341 lira late on Thursday
Euro/Turkish lira: UP at 7.0252 lira from 6.6438 lira
Euro/dollar: UP at $1.1406 from $1.1377
Pound/dollar: UP at $1.2728 from $1.2716
Dollar/yen: DOWN at 110.43 from 110.90 yen
Tokyo - Nikkei 225: UP 0.35 percent at 22,270.38 (close)
Hong Kong - Hang Seng: UP 0.4 percent at 27,213.41 (close)
Shanghai - Composite: DOWN 1.34 percent at 2,668.97 (close)
Oil - Brent Crude: UP 92 cents at $72.35 per barrel
Oil - West Texas Intermediate: UP 75 cents at $66.21