SHANGHAI: China stocks posted their biggest fall in more than two months on Tuesday, as tensions between Washington and Beijing escalated on news US House of Representatives Speaker Nancy Pelosi was set to visit Taiwan during the day.

Pelosi, who began an Asia trip earlier on Monday in Singapore, was due to spend Tuesday night in Taiwan, three sources said, as the United States said it wouldn’t be intimidated by Chinese threats to never “sit idly by” if she made the trip to the self-ruled island claimed by Beijing.

The news was enough to unsettle financial markets, which have been shaken by the war in Ukraine, surging commodity-driven inflation and rising global borrowing costs. Investors are acutely sensitive to any renewed Sino-US tensions as both countries remain at loggerheads on issues ranging from trade to technology and human rights.

The blue-chip CSI300 index fell 2.0%, to 4,107.02, while the Shanghai Composite Index lost 2.3% to 3,186.27 points.

The Hang Seng index fell 2.4%, to 19,689.21, while the China Enterprises Index lost 2.5%, to 6,702.07 points.

Several Chinese warplanes flew close to the median line of the sensitive Taiwan Strait on Tuesday morning, a source told Reuters, while four US warships, including an aircraft carrier, were positioned in waters east of the island on “routine” deployments.

Stocks fell across the board, with property developers , healthcare, resources and new energy shares all down more than 2%.

“The odds of an accident are rising,” said Marko Papic, chief strategist at Clocktower Group. “In the near-term, investors may consider hedging such risk with a tactical short position in Chinese equities and currency.”