World stocks jarred by emerging markets rout

LONDON: World equities were in a jittery mood Thursday as an emerging markets rout posed a major headache for investors, already on red alert over Washington's trade war with Beijing, dealers said.

In Europe, Frankfurt, London and Paris all bourses closed weaker, extending heady declines of more than two percent over the previous two sessions.

Wall Street also slipped into negative territory, having earlier tried, unsuccessfully, to build on the previous day's tiny gains.

"A sense of doom and gloom lingered across financial markets today as contagion fears from the brutal emerging market sell-off rattled investor confidence," said Lukman Otunuga, a research analyst at FXTM.

Earlier Asian bourses deepened their losses as concerns about contagion from emerging markets (EM) -- centred on Argentina, Turkey and South Africa -- frayed investor nerves, while sentiment was also dented by the possibility of further US tariffs on China.

Meanwhile, India's rupee hit a new record low of 72 to the dollar.

- 'Animal spirits' -

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"Animal spirits take hold very quick because investors outside of emerging markets often have EM exposure these days. What happens in the sphere can have an impact on investment elsewhere," Brooks told AFP.

"Also, contagion works because problems in EM can make people fearful of risky assets elsewhere, and risk in general."

The turmoil has revived worries of a repeat from 1997, when a fall in the Thai currency mushroomed into a much broader Asian economic crisis.

"Emerging markets turmoil reflects concern about the impact of trade wars on growth, tightening monetary policy and a turn lower in EM growth," added Kit Juckes, macro strategist at French bank Societe Generale.

"Turkey, South Africa and Argentina are all minor players in global markets but they are all countries with sizeable current account deficits who are in danger of running into international funding problems.

"And eventually, contagion is bound to occur, taking volatility up in developed markets."

- Crypto plunge -

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Trump's trade rows meanwhile continue to play out, with a public consultation on his threatened tariffs on $200 billion of Chinese goods ending this week.

Investors are keeping a nervous eye on Washington after the president said last month he wanted to impose the levies as soon as the deadline had passed.

"The China/US trade dispute is barely beginning. Today, consultation on proposed tariffs ends, and then the tariffs will be imposed and then we go from sentiment to economic impact," added Juckes.

"And then the dispute threatens to move elsewhere and if the result is a hit to global trade growth, that has a huge long-term economic impact."

Separately, talks between Washington and Ottawa on the revised North American Free Trade Agreement are continuing.

Most cryptocurrencies fell Thursday fell for the second session running, with dealers citing Goldman Sachs' reported decision to hold off on the creation of a crypto trading platform as the reason.

Bitcoin lost about 10 percent on the day.

- Key figures around 1540 GMT -

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London - FTSE 100: DOWN 0.9 percent at 7,318.96 points (close)

Frankfurt - DAX 30: DOWN 0.7 percent at 11,955.25 (close)

Paris - CAC 40: DOWN 0.3 percent at 5,243.84 (close)

EURO STOXX 50: DOWN 0.5 percent at 3,297.60

New York - Dow: DOWN 0.2 percent at 25,931.90

Tokyo - Nikkei 225: DOWN 0.4 percent at 22,487.94 (close)

Hong Kong - Hang Seng: DOWN 1.0 percent at 26,974.82 (close)

Shanghai - Composite: DOWN 0.5 percent at 2,691.59 (close)

Euro/dollar: DOWN at $1.1613 from $1.1630 at 2100 GMT

Pound/dollar: UP at $1.2929 from $1.2905

Dollar/yen: DOWN at 110.88 yen from 111.53 yen

Oil - Brent Crude: DOWN 46 cents at $76.80 per barrel

Oil - West Texas Intermediate: DOWN 78 cents $67.94