World markets take dim view of Trump advisor quitting

LONDON: Stock market investors across the world got a jolt from the sudden resignation of a key Trump advisor on Wednesday, prompting a drop on Wall Street and in Asia, although Europe regained its poise after an early slump.

Gary Cohn's abrupt decision to step down was seen as increasing the likelihood of Donald Trump provoking a trade war.

"US stocks are moving noticeably lower in early action, with lingering concerns about the global trade impact of President Donald Trump's tariff plan being met with yesterday's resignation of the White House's top economic advisor Gary Cohn," analysts at the Charles Schwab brokerage said.

Early excitement at North Korea's offer of denuclearisation talks helped European market sentiment, dealers said, as did a gradual recovery of the dollar.

"Investors panicked in response to Gary Cohn's unexpected -- although not entirely surprising -- announcement that he's resigning from his post as Donald Trump's top economic adviser," said Fawad Razaqzada, analyst at Forex.com.

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"The market's reaction suggests investors are now even more concerned that with one of Trump administration's strongest free trade advocates gone, that the US trade policy will head further into protectionist territory."

Razaqzada wondered, however, whether markets were perhaps "overreacting" to the resignation.

Investors had already been on edge over expected US interest rate rises, and rattled further since the US president last week unveiled plans for controversial tariffs on steel and aluminium imports as part of his "America First" agenda.

International Monetary Fund chief Christine Lagarde on Wednesday warned that a trade war would snuff out global growth, and the EU published a list of products - ranging from peanut butter to motorcycles - that it would target with tariffs if Trump makes good on his threat.

Financial markets will meanwhile miss Cohn, who was once tipped as a possible choice to head the Federal Reserve, because they regarded him as their ally in the White House, analysts said.

"Cohn was seen as one of Wall Street's guys and in his role as adviser to the president he was widely viewed as having the markets' back," said David Cheetham, chief market analyst at XTB.

In Asia, stock markets slid despite Pyongyang's olive branch to South Korea and the US -- saying it was open to discussing its nuclear programme.

Seoul announced the two Koreas would hold an historic summit next month -- and that the North's leader Kim Jong Un was ready to suspend provocative missile and nuclear tests while sitting down for dialogue.

Trump, who has said the US would not talk unless Kim was prepared to give up his weapons, welcomed the breakthrough offer.

- Key figures around 1640 GMT -

London - FTSE 100: UP 0.2 percent at 7,157.84 points (close)

Frankfurt - DAX 30: UP 1.1 percent at 12,245.36 (close)

Paris - CAC 40: UP 0.3 percent at 5,187.83 (close)

EURO STOXX 50: UP 0.6 percent at 3,377.36

New York - Dow: DOWN 0.7 percent at 24,708.33

Seoul - KOSPI: DOWN 0.4 percent at 2,401.82 (close)

Tokyo - Nikkei 225: DOWN 0.8 percent at 21,252.72 (close)

Hong Kong - Hang Seng: DOWN 1.0 percent at 30,196.92 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,271.67 (close)

Euro/dollar: DOWN at $1.2391 from $1.2408 at 2200 GMT

Pound/dollar: DOWN at $1.3886 from $1.3891

Dollar/yen: DOWN at 106.13 yen from 106.17 yen

Oil - Brent North Sea: DOWN 62 cents at $65.17 per barrel

Oil - West Texas Intermediate: DOWN 48 cents at $62.12