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Global stocks extend slide, yen up as Sino-US trade dispute escalates

Asian stocks extended a global downturn today, while the safe-haven yen rose as US President Donald Trump threatened new tariffs on Chinese goods in an escalating tit-for-tat trade war between the world's two biggest economies that has rattled financial markets.

Trump warned yesterday that Washington would impose a 10 percent tariff on US$200 billion (RM799.5 billion) of Chinese goods after Beijing's decision to raise tariffs on US$50 billion (RM199.8 billion) in US goods.

Trump said if China increases its tariffs again in response to the latest US move, "we will meet that action by pursuing additional tariffs on another $200 billion of goods".

The retaliatory moves come after Trump said last week he was pushing ahead with tariffs on US$50 billion of Chinese imports.

The trade frictions have kept financial markets on edge, with investors increasingly worried that a full-blown trade conflict could derail global growth.

S&P 500 futures were off 0.6 percent, pointing to another down day for Wall Street shares which slipped yesterday.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.1 percent.

Japan's Nikkei lost 0.45 percent, South Korea's Kospi edged down 0.1 percent while Australian stocks added 0.3 percent.

The dollar fell 0.45 percent to 110.06 yen following Trump's tariff comments. The yen is often sought in times of market turmoil and political tensions.

"The financial markets are trying to gain a breather after last week, when there were many news events, but US-China trade remains a lingering theme, at least until the US tariffs take effect early in July," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

"While trade tensions are not a positive theme, the market has become accustomed to President Trump's comments, which appear to be negotiating tactics."

China stocks open lower

The euro was 0.05 percent higher at US$1.1631. The Australian dollar, often seen as a proxy to China-related trades, shed 0.25 percent to $0.7404.

In commodities, crude oil markets remained volatile ahead of last Friday's Opec meeting at a time when Russia and Saudi Arabia are pushing for higher output.

Brent crude futures fell 0.3 percent to US$75.11 a barrel after rallying 2.5 percent overnight.

Meanwhile, China stocks opened sharply lower today, with the Shanghai benchmark falling below the psychologically key 3,000 points for the first time in nearly 21 months, as mainland investors had their first chance to react to the escalating Sino-US trade tensions.

Investors back from yesterday's Dragon Boat Festival holiday dumped stocks, amid signs Washington and Beijing are on the brink of a trade war.

The CSI300 index fell 1.2 percent to 3,707.23 points at 1.45 GMT (9.45am in Malaysia) , while the Shanghai Composite Index lost 1.4 percent to 2,981.15 points.

The Hang Seng index in Hong Kong was down 1.3 percent, to 29,906.79 points.

Chinese Treasury futures were unperturbed by the latest tariff announcement, with 10-year Treasury futures for September delivery, the most traded contact, up 0.07 percent at 95.145 this morning.

- Reuters

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