Stocks wobble as trade war worries deepen

LONDON: Stock markets were uneasy and the dollar fell Monday following reports that US President Donald Trump is planning to hit China with another round of tariffs, dealing a blow to hopes for conciliatory talks between the two economic giants.

Traders had late last week welcomed US Treasury Secretary Steven Mnuchin's offer to meet officials from Beijing to avert an all-out trade war.

However, The Washington Post and Wall Street Journal said the president had decided to impose 10-percent levies on $200 billion of Chinese imports and could make an announcement in the coming days.

That would come on top of the $50 billion already announced over the summer and would account for about half of China's exports to the United States.

Beijing has threatened to retaliate against any measures.

"The ongoing conflict between the US and China continues to be a primary driver of market sentiment, with investors concerned about the prospect of a full blown trade war as neither side shows a willingness to blink," said Craig Erlam, senior market analyst at Oanda trading group.

Hong Kong's stock market led losses Monday, while the main European indices were lukewarm.

While investors are in a selling mood, some positives could be taken from reports that Trump was considering 10 percent tariffs instead of the feared 25 percent, said JP Morgan Asset Management global market strategist Kerry Craig.

"Timing is also important when it comes to enacting any new tariffs. A staggered implementation is being viewed as the best of a bad situation," Craig added.

Meanwhile elsewhere on foreign exchange Monday, emerging market currencies continue to struggle as investors fret over a possible spillover from financial crises in Argentina, Turkey, and South Africa.

The pound held up, with British Prime Minister Theresa May warning,  n an interview broadcast Monday, that her Brexit plan is the only alternative to crashing out of the European Union without agreement.

It came as the International Monetary Fund warned that Britain's economy would suffer "substantial costs" should it depart the EU in March with no divorce agreement.

- Key figures around 1335 GMT -

New York - Dow Jones: FLAT at 26,143.92 points

London - FTSE 100: DOWN 0.1 percent at 7,299.42

Frankfurt - DAX 30: DOWN 0.2 percent at 12,095.95

Paris - CAC 40: FLAT at 5,354.23

EURO STOXX 50: UP 0.1 percent at 3,009.40

Hong Kong - Hang Seng: DOWN 1.3 percent at 26,932.85 (close)

Shanghai - Composite: DOWN 1.1 percent at 2,651.79 (close)

Tokyo - Nikkei 225: Closed for a public holiday

Euro/dollar: UP at $1.1691 from $1.1627 at 2030 GMT on Friday

Pound/dollar: UP at $1.3149 from $1.3069

Dollar/yen: DOWN at 111.98 yen from 112.00 yen

Oil - Brent Crude: UP 43 cents at $78.52 per barrel

Oil - West Texas Intermediate: UP 23 cents at $69.22 per barrel