Trade, currency war fears rattle markets

LONDON: Stock markets largely retreated Monday as jitters grew over potentially full-blown trade and currency wars, analysts said.

Meanwhile, an exchange of bellicose comments between Iranian President Hassan Rouhani and US President Donald Trump over the weekend renewed fears on the oil markets.

"Stocks are broadly lower as dealers remain nervous about the state of global trading relations," said analyst David Madden at CMC Markets UK.

London's benchmark FTSE 100 index ended the day down 0.3 percent compared with Friday's close.

In the eurozone, Frankfurt's DAX 30 slipped 0.1 percent and the Paris CAC 40 shed 0.4 percent.

Wall Street stocks were narrowly mixed in late morning trade, with the Dow down less than a tenth of a percentage point.

The dollar fought back versus the euro and pound, but fell against the yen.

"Earnings season could provide a welcome distraction from the political theatre of trade wars but even here it's going to feature as tariffs will have an impact on the outlooks of a number of companies and investors will be keen to hear their views," noted Craig Erlam, senior market analyst at Oanda trading group.

Ahead of the weekend, Trump attacked Washington's main trading partners for their currency policies.

"China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollar gets stronger and stronger with each passing day -- taking away our big competitive edge. As usual, not a level playing field," Trump tweeted.

Trump's combative stance has compounded fears of an all-out trade and currency war, with the US slapping tariffs on steel and aluminium from the EU, Canada and Mexico, in addition to levies on goods from China worth tens of billions of dollars.

Tokyo's stock market meanwhile dropped 1.3 percent -- falling for a third straight trading day -- as a stronger yen hurt exporters, making their products less competitive abroad.

Fears that tensions would escalate into a full-blown trade war dominated a meeting of Group of 20 finance ministers and central bankers at the weekend in Buenos Aires.

The final communique from the group of leading economies stressed "the need to step up dialogue and actions to mitigate risks and enhance confidence" as worries have mounted.

In corporate action, shares in auto giant Fiat Chrysler skidded lower Monday after its boss of 14 years Sergio Marchionne suffered life-changing health problems, forcing the company to name a new management team.

The shares closed down 1.7 percent in Milan and were 2.1 percent lower in New York trading. Shares in separately listed Ferrari slumped 4.9 percent in Milan and 4.7 percent in New York.

Meanwhile, shares in budget airline Ryanair fell in London trade as it reported its profit had been squeezed by higher fuel costs and salaries for pilots. With limited visibility on Brexit and a strike set for this week, the company's share price tumbled 6.4 percent.

On energy markets, the price of crude oil rose after Trump bluntly warned his Iranian counterpart never to threaten the United States again or it would "suffer consequences the likes of which few throughout history have ever suffered before".

"Sanctions are lined up for Iran and the tough talk from Washington has sparked fears about production and supply in the region," said CMC Markets UK's Madden.

- Key figures at 1530 GMT -

New York - Dow: DOWN 0.08 percent at 25,039.01points

London - FTSE 100: DOWN 0.3 percent at 7,655.79 (close)

Frankfurt - DAX 30: DOWN 0.1 percent at 12,548.57 (close)

Paris - CAC 40: DOWN 0.4 percent at 5,378.25 (close)

EURO STOXX 50: DOWN 0.2 percent at 3,453.39

Tokyo - Nikkei 225: DOWN 1.3 percent at 22,396.99 (close)

Hong Kong - Hang Seng: FLAT at 28,240.44 (close)

Shanghai - Composite: UP 1.1 percent at 2,859.54 (close)

Euro/dollar: DOWN at $1.1702 from $1.1723 at 2100 GMT

Pound/dollar: DOWN at $1.3102 from $1.3135

Dollar/yen: DOWN at 111.38 yen from 111.50 yen

Oil - Brent Crude: UP 65 cents at $73.72 per barrel

Oil - West Texas Intermediate: UP 17 cents at $68.43 per barrel