European, Asian stocks rally; tech slump hits Wall Street

NEW YORK: European and Asian stocks rallied on receding fears of a trade war but in the United States stocks were pummeled by a pullback in technology shares.

Equity indices in London, Paris, Frankfurt, Shanghai and Tokyo all jumped more than one percent, taking their cue from Monday's early rally in the US after The Wall Street Journal reported top US and Chinese officials were in talks that could avert a trade war.

"Ultimately, Trump's target was and remains to reduce the country's sizable trade deficit with a number of countries," said senior market analyst Craig Erlam of OANDA, adding that he was skeptical Trump will follow through on his threats to prompt a trade war.

"Given the reaction we've seen in markets over the last couple of weeks I don't think he'll be keen to follow through on his threats and risk sending markets into a tailspin."

Jasper Lawler, head of research at London Capital Group, cautioned investors "not to get too excited" because "huge up-days do not typically happen in a strong market."

Instead, this looked like a "dead cat bounce," Lawler said.

And indeed, after opening higher, US stocks also weakened soon thereafter, with several struggling tech companies suffering deep declines.

The Nasdaq finished down nearly three percent at 7,008.81.

"You've got large cap tech that led this downdraft," said Art Hogan, chief market strategist at Wunderlich Securities.

"Once this market starts in a direction like this, you're not going to see anybody step in and catch a falling knife."

Facebook dropped 4.9 percent as the social media company continued to face scrutiny over a customer data scandal.

Chief executive Mark Zuckerberg turned down a request by British lawmakers to appear in Parliament but reportedly agreed to testify at a US congressional hearing.

Tesla slumped 8.2 percent after the National Transportation Safety Board announced it was investigating a fatal crash last week involving a Tesla automobile in California.

Twitter dived 12.0 percent after a report from Citron Research warned the company was vulnerable to a regulatory crackdown over its data privacy policies. Citron is known for placing bets on stock price falls.

Google parent Alphabet sank 4.6 percent after a US appeals court revived Oracle's lawsuit alleging that Google owed billions of dollars in damages over the search engine company's use of Java programming language in its Android smartphone operating system. Oracle lost 2.4 percent.

- Key figures around 2100 GMT -

New York - Dow: DOWN 1.4 percent at 23,857.71 (close)

New York - S&P 500: DOWN 1.7 percent at 2,612.62 (close)

New York - Nasdaq: DOWN 2.9 percent at 7,008.81 (close)

London - FTSE 100: UP 1.6 percent at 7,000.14 (close)

Frankfurt - DAX 30: UP 1.6 percent at 11,970.83 (close)

Paris - CAC 40: UP 1.0 percent at 5,115.74 (close)

EURO STOXX 50: UP 1.2 percent at 3,316.91 (close)

Tokyo - Nikkei 225: UP 2.7 percent at 21,317.32 (close)

Hong Kong - Hang Seng: UP 0.8 percent at 30,790.83 (close)

Shanghai - Composite: UP 1.1 percent at 3,166.65 (close)

Dollar/yen: DOWN at 105.36 yen from 105.41 yen at 2100 GMT

Euro/dollar: DOWN at $1.2402 from $1.2444

Pound/dollar: DOWN at $1.4159 from $1.4229

Oil - Brent North Sea: DOWN 1 cents at $70.11 per barrel

Oil - West Texas Intermediate: DOWN 30 cents at $65.25 per barrel