Investors cheered confirmation that China’s top negotiator Vice Premier Liu He will attend this week’s high-level trade talks in Washington (WANG ZHAO)

London (AFP) – Eurozone stock markets extended losses Tuesday and Asia traded mixed as investors await the latest twists and turns over US-China trade talks.

London’s stock market slid 1.0 percent, with the benchmark FTSE 100 index playing catch up after a long holiday weekend in Britain.

Tokyo slumped 1.5 percent as dealers there returned after being off for six working days, while Seoul dropped 0.9 percent following a long weekend.

“The US-China one-step-forward-two-step-back hurt US markets late Monday and extended into Asian and European trading,” noted Fiona Cincotta, senior market analyst at City Index traders.

“The (Frankfurt) DAX initially held up helped by data showing that German manufacturing orders picked up in March but it eventually crumbled because German exporters are highly sensitive to the stability of the Chinese market, one of their top export destinations.”

Indices had slumped Monday, with Shanghai suffering its heaviest loss in three years, after US President Donald Trump threatened to hike tariffs on $200 billion of Chinese goods amid apparent setbacks in trade talks between the economic superpowers.

Trump’s remarks shocked markets, coming just days after officials on both sides had sounded positive on the talks, with markets broadly expecting an agreement to be announced soon.

While some observers pointed out that such high-stakes moves are characteristic of Trump’s negotiating style and that they expect a deal to be agreed anyway, OANDA senior market analyst Jeffrey Halley remained cautious.

“Say what you want about the US president… but predictability and subtlety were never part of his election pledges,” he said in a note.

“China has most certainly found this out the hard way and likely explains why they are still sending their full delegation to this week’s round of trade talks.”

Shanghai’s main stocks index recovered slightly Tuesday after closing down 5.6 percent the previous session.

The International Monetary Fund meanwhile on Tuesday warned tensions between the economic superpowers were a “threat” to the world economy.

On currency markets, the yuan stabilised after being hammered Monday, though most other higher-yielding, riskier units managed to claw back some of their losses.

The Australian dollar rallied 0.7 percent after the country’s central bank held interest rates at a record low 1.5 percent, brushing off calls for a cut as it said the economy was still in “reasonable” shape despite weak inflation and wage growth.

But the Reserve Bank of Australia signalled it could cut at upcoming meetings if the labour market does not improve.

Elsewhere, Turkey’s lira “has come back onto investors’ radars with a three percent plunge… triggered by election shenanigans in the country”, said Cincotta.

Turkish President Recep Tayyip Erdogan on Tuesday welcomed an order to re-run the recent Istanbul election, a move the opposition has branded an attack on democracy.

His ruling Justice and Development Party (AKP) lost the mayorship of Turkey’s biggest city by a narrow margin and has refused to accept defeat.

– Key figures around 1030 GMT –

London – FTSE 100: DOWN 1.0 percent at 7,312.11 points

Frankfurt – DAX 30: DOWN 0.5 percent at 12,224.99

Paris – CAC 40: DOWN 0.6 percent at 5,450.25

EURO STOXX 50: DOWN 0.6 percent at 3,441.82

Tokyo – Nikkei 225: DOWN 1.5 percent at 21,923.72 (close)

Hong Kong – Hang Seng: UP 0.5 percent at 29,363.02 (close)

Shanghai – Composite: UP 0.7 percent at 2,926.39 (close)

New York – Dow: DOWN 0.3 percent at 26,438.48 (close)

Euro/dollar: UP at $1.1203 from $1.1199 at 2050 GMT

Pound/dollar: DOWN at $1.3089 from $1.3097

Dollar/yen: DOWN at 110.58 yen from 110.87 yen

Oil – Brent Crude: DOWN 65 cents at $70.59 per barrel

Oil – West Texas Intermediate: DOWN 37 cents at $61.88 per barrel

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.