Donald Trump took a shot at China and issued a warning to Xi Jinping before jetting off for the G20 summit in Japan (Brendan Smialowski)

London (AFP) – World stock markets wavered Thursday as investors mulled US President Donald Trump’s threat to impose more tariffs on China should crunch talks with his Chinese counterpart Xi Jinping fail this weekend.

Equity markets in Asia rose but Europe lapsed into negative territory as trade war jitters returned ahead of the G20 summit in Osaka, Japan.

Haven investments the yen and gold dropped after recent strong rallies, boosting the dollar, while oil prices retreated ahead of next week’s key OPEC output meeting.

Bitcoin plunged nearly $2,000 after recent surges, once more emphasising the volatility of cryto-currencies. 

“The G20 summit will include trade talks between the US and China and investors will be looking for any sign that the two countries can sort out their differences,” noted Russ Mould, investment director at online stockbroker AJ Bell.

“Investors in Asia are certainly looking optimistic with markets in China, Hong Kong, India and Japan all rallying. European markets are more muted.”

Before setting off for the G20 summit in Japan, Trump said in an interview that he had a “Plan B” in case the face-to-face talks show no progress, adding he would “take in billions and billions of dollars a month and we’ll do less and less business with them”.

He said Xi wanted to make a deal as “China’s economy is going down the tubes”.

His remarks on Fox Business Network came soon after Treasury Secretary Steven Mnuchin said the two sides were “90 percent” of the way to an agreement when talks broke down last month, with the US blaming Beijing for backsliding.

Still, observers said traders were taking the latest developments with a pinch of salt.

“The market is unreactive to these types of headlines given that Trump has continued to adopt a ‘good cop/bad cop’ strategy with… Mnuchin,” said Stephen Innes at Vanguard Markets.

“Instead, market participants are content to wait for Saturday’s meeting to unfold where the proof will be in the pudding.

“A harmonious photo op could go a long way to soothing investors’ concerns at the market open on Monday,” Innes added.

However, while there is optimism for an eventual agreement, analysts say they are not expecting anything major to come out of the Osaka meeting.

“The G20 is looking to be a disappointment to investors looking for a blockbuster trade deal to be announced and is now expected to yield a new round of talks between the US and China to be held later this year,” added Oanda analyst Alfonso Esparza. 

– Key figures around 1030 GMT –

London – FTSE 100: DOWN 0.4 percent at 7,384.55 points

Paris – CAC 40: DOWN 0.5 percent at 5,475.56

Frankfurt – DAX 30: DOWN 0.1 percent at 12,235.14

EURO STOXX 50: DOWN 0.3 percent at 3,432.64 

Tokyo – Nikkei 225: UP 1.2 percent at 21,338.17 (close)

Hong Kong – Hang Seng: UP 1.4 percent at 28,621.42 (close)

Shanghai – Composite: UP 0.7 percent at 2,996.79 (close)

New York – Dow: FLAT at 26,536.82 (close)

Euro/dollar: UP at $1.1372 from $1.1369 at 2100 GMT

Pound/dollar: UP at $1.2696 from $1.2690

Dollar/yen: UP at 107.95 yen from 107.79

Brent North Sea crude: DOWN 70 cents at $65.79 per barrel

West Texas Intermediate: DOWN 62 cents at $58.76 per barrel

Gold: DOWN at $1,403.14 per ounce from $1,410.78

Bitcoin – DOWN at $11,838.41 from $13,698

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