Stock Markets Slump as Trump Lashes Out at China

Stock markets on both sides of the Atlantic fell on Tuesday after U.S. President Donald Trump lashed out at Beijing just as trade talks resumed, dealers said.

The British pound, meanwhile, continued its slide to fresh two-year lows as more investors were betting on a no-deal Brexit.

Trump ripped into China after US negotiators arrived in Shanghai to resurrect talks aimed at ending a year-long trade war between the world's two top economies.

"My team is negotiating with them now, but they always change the deal in the end to their benefit," Trump tweeted.

- 'Off the handle' -

Investors reacted by pulling out of equities in anticipation of worse to come.

"President Trump sends equity markets reeling, yet again," said Stephen Innes, at SPI Asset Management.

"Whatever shred of optimism markets had about the ongoing trade negotiations were dealt a severe blow when President Trump flew off the handle again at China for not buying American agricultural products," he said.

Renewed jitters over trade compounded a cocktail worries already weighing on stocks, said Fawad Razaqzada, market analyst at Forex.com.

US markets were also lower in early Wall Street business, but appeared more resilient than their European counterparts.

- Fed anticipation 'palpable' -

Frankfurt's benchmark DAX 30 index tumbled in the afternoon deals, with German airline Lufthansa slumping after weak profits.

Paris was hurt by figures showing France's economy stagnated in the second quarter, growing by a meager, and lower-than-forecast, 0.2 percent.

London's FTSE 100 index outperformed eurozone markets as the weak pound lifted UK-based multinationals who sell their goods abroad. 

Both the U.S. Federal Reserve and the Bank of England are slated on Thursday to announce the outcomes of their latest monetary policy gatherings. Expectations are that the Fed could deliver the first interest rate cut in a decade.

"As we get closer to the Fed decision, the sense of anticipation in markets is almost palpable," said analyst Chris Beauchamp at spread-betting firm IG.

 - Pound plumbs new lows - 

Meanwhile, the Brexit-hit pound continued to suffer as expectations grew of a no-deal British withdrawal from the European Union in October.

In Asian trading, sterling sank as low as $1.2119 -- a level last seen in March 2017, before clawing back some ground.

"Prime Minister Boris Johnson said he had no intention of meeting EU leaders in person until they showed a willingness to change their position on the Irish backstop and withdrawal agreement," said CMC Markets chief analyst Michael Hewson.

"This hard line, so late in the day, appears to have prompted a sudden realisation that a no-deal Brexit has suddenly become a much more likely event."

- Key figures around 1340 GMT -

London - FTSE 100: DOWN 0.2 percent at 7,667.19

Frankfurt - DAX 30: DOWN 2.2 percent at 12,150.53 points

Paris - CAC 40: DOWN 1.5 percent at 5,514.51

EURO STOXX 50: DOWN 1.6 percent at 3,465.13

New York - Dow: DOWN 0.4 percent at 27,119.34

Pound/dollar: DOWN at $1.2171 from $1.2219 at 2100 GMT

Euro/pound: UP at 91.58 pence from 91.21 pence 

Euro/dollar: UP at $1.1148 from $1.1145

Dollar/yen: DOWN at 108.56 yen from 108.78

Tokyo - Nikkei 225: UP 0.4 percent at 21,709.31 (close)

Hong Kong - Hang Seng: UP 0.1 percent at 28,146.50 (close)

Shanghai - Composite: UP 0.4 percent at 2,952.34 (close)

Brent North Sea crude: UP 48 cents at $64.10 per barrel

West Texas Intermediate: UP 34 cents at $57.21