World stocks retreat as traders brace for China-US talks

LONDON: Global stock markets slid Monday on jitters over looming high-level trade talks between China and the United States that outweighed positive corporate earnings, analysts said.

European equities were firmly in the red at the close, while in late morning New York business the DJIA posted losses of nearly 1.5 percent.

Global equities started the week "on the back foot", said Dean Popplewell at Oanda.

Markets were weighing "political developments, from Sino-U.S trade to Brexit, against U.S corporate earnings that have, to date, surpassed many analysts expectations, and this despite ongoing signs of a global economic slowdown".

The pound dropped against the dollar ahead of Tuesday's vote on British Prime Minister Theresa May's revised Brexit deal, with many believing that even if it is kicked out by MPs Britain will not leave the European Union without an agreement.

There is a growing sense that May will seek a delay in the country's March 29 leaving date to give her more time to reach a deal.

Oil prices shed more than $2, while earlier in Asia, stock markets closed mixed as investors looked ahead to a week chock-full of key  events.

- 'Still tricky' -

On the trade front, hopes that a deal can be struck between the world's top two economies helped fuel a rally this month in global equities which had been hammered in December.

While there have been conflicting reports on the likelihood of an agreement to end the trade war, analysts say it is in the interests of both sides to reach a deal, with China's economy stuttering and President Donald Trump gearing up for his re-election campaign.

"Although coming to an agreement is still tricky, both sides have little incentive to escalate tensions," said Tai Hui, chief market strategist for Asia-Pacific at JP Morgan Asset Management.

"Markets will at least expect an extension of the truce in tariff increases beyond early March, while more difficult issues are still being worked on by both sides."

As well as the Wednesday-Thursday meeting in Washington, dealers also have in their sights the US Federal Reserve's latest policy meeting, where the central bank's statement will be pored over for an idea about its interest rate plans.

Also coming up is the release of US jobs and economic growth data, Chinese manufacturing activity results -- and a number of big-name earnings, including from Apple, Samsung, Facebook and Alibaba.

Analysts said there was little reaction to news that Trump had agreed to re-open the government after public services started to buckle in the longest-ever shutdown.

The deal that will see 800,000 workers finally get paid will only last a few weeks and does nothing to resolve the row over the president's demand for billions of dollars to pay for a Mexican border wall.

- Key figures around 1640 GMT -

London - FTSE 100: DOWN 0.9 percent at 6,747.10 points (close)

Frankfurt - DAX 30: DOWN 0.6 percent at 11,210.31 (close)

Paris - CAC 40: DOWN 0.8 percent at 4,888.58 (close)

EURO STOXX 50: DOWN 0.8 percent at 3,137.27

New York - Dow: DOWN 1.4 percent at 24,388.68

Tokyo - Nikkei 225: DOWN 0.6 percent at 20,649.00 (close)

Hong Kong - Hang Seng: FLAT at 27,576.96 (close)

Shanghai - Composite: DOWN 0.2 percent at 2,596.98 (close)

Euro/dollar: UP at $1.1443 from $1.1406 at 2200 GMT Friday

Pound/dollar: DOWN at $1.3170 from $1.3196

Dollar/yen: DOWN at 109.18 yen from 109.55

Oil - Brent Crude: DOWN $1.95 at $59.69 per barrel

Oil - West Texas Intermediate: DOWN $2.17 at $51.52