Stock markets pressured by Kim-Trump summit failure

LONDON: World stock markets mostly sank Thursday as a summit between Donald Trump and Kim Jong Un ended abruptly without an agreement.

Asian equities had been fluctuating throughout the day on tempered optimism over China-US trade talks, weak factory data from Beijing and fresh geopolitical tensions in Kashmir.

But they took a decisive turn south after an expected lunch and signing ceremony between the US and North Korean leaders was called off at the last minute.

European indices also mainly fell, with London down half a percentage point on persistent Brexit uncertainty, and the pound continuing to struggle.

Frankfurt was also down, while Paris managed to remain stable.

Wall Street was little changed at the opening bell, as news that the US economy grew at an unexpectedly strong pace in 2018 was offset by the Trump-Kim disappointment and some weak corporate earnings reports, said analysts at Charles Schwab.

- Risk sentiment takes 'hit' -

"Global equities in general have pulled back as risk sentiment took a hit after the US and North Korea failed to reach an agreement over denuclearisation for the (Korean) peninsula," said XTB analyst David Cheetham.

"US president Donald Trump and North Korean leader Kim Jong Un abruptly cut short their summit in Hanoi, and in doing so cancelled a signing ceremony as the two leaders failed to make any tangible progress and agree terms on the deal."

The shock news came just hours after Kim raised the prospect of a permanent US diplomatic presence in Pyongyang and Trump said he was in "no rush" for a speedy deal over North Korea's nuclear programme.

Trump later told reporters that he was not willing to give in to Kim's demands to lift US sanctions on North Korea.

In reaction, Seoul dived 1.8 percent and Tokyo ended 0.8 percent lower, while Shanghai and Hong Kong each shed 0.4 percent.

The global rally that has characterised most of this year had already taken a knock after US Trade Representative Robert Lighthizer told lawmakers that "real progress" had been made in trade talks with China, but a lot of work was still needed before a pact is signed.

While his comments did not derail expectations of an agreement at some point -- with both sides reporting good progress and Trump delaying a deadline for a deal -- it did give traders pause for thought, observers said.

- Chinese economic gloom -

Also fuelling selling pressure was gloomy data showing Chinese manufacturing activity contracted for a third straight month in February, with factories hit by the long Lunar New Year break, concerns about slowing growth and uncertainty from the trade row.

However, Zhou Hao, a senior emerging markets economist at Commerzbank AG, said the results were likely not as bad as they seemed and the outlook could be positive.

"I think we still want to wait for the next month's reading as this month's is distorted by the holiday," he said.

"Also the economy could stabilise this month. Rising input prices suggest that there is no need to worry about deflation, so the question now rests on whether the economy has enough impetus."

Nervousness continues to stalk trading floors after Pakistan and India said they had shot down each other's fighter jets on Wednesday, fuelling worries of a conflict between the nuclear-armed neighbours.

- Key figures around 1430 GMT -

London - FTSE 100: DOWN 0.6 percent at 7,068.30 points

Frankfurt - DAX 30: DOWN 0.1 percent at 11,480.35

Paris - CAC 40: UP 0.1 percent at 5,227.79

EURO STOXX 50: UP 0.2 percent at 3,290.03

New York - Dow: FLAT at 25,986.06

Tokyo - Nikkei 225: DOWN 0.8 percent at 21,385.16 (close)

Hong Kong - Hang Seng: DOWN 0.4 percent at 28,633.18 (close)

Shanghai - Composite: DOWN 0.4 percent at 2,940.95 (close)

Pound/dollar: DOWN at $1.3273 from $1.3309

Euro/pound: UP at 85.79 pence from 85.43 pence

Euro/dollar: UP at $1.1388 from $1.1370 at 2200 GMT

Dollar/yen: UP at 111.07 yen from 111.00 yen

Oil - Brent Crude: DOWN 8 cents at $66.50 per barrel

Oil - West Texas Intermediate: UP 15 cents at $57.09