Stock markets rise, oil slips lower

LONDON: Stock markets gained ground in Europe on Monday but oil prices wobbled before heading back downwards against a backdrop of US President Donald Trump's widening trade wars.

The British pound was flat against the dollar after data showed that UK manufacturing contracted for the first time in three years as Brexit stockpiling dried up.

Analysts said stocks were getting some support from buying in response to the May pullback when major indices fell almost seven percent.

"If the stock market has anything going for it as it begins the month of June, it could be the burgeoning sense that investor pessimism is rising and that the market is appearing oversold on a short-term basis," remarked analyst Patrick O'Hare at Briefing.com.

Trump's abrupt threat last week to hit Mexico with tariffs over immigration concerns had done little to reassure investors already anxious about the increasingly fractious US-China trade war.

- Fears of global recession -

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Trump, who began a state visit to Britain on Monday, has followed up the threats against Mexico with an announcement that Washington would no longer offer preferential trade treatment to India, effective Wednesday, in a bid to pressure New Delhi to increase market access for US goods.

Beijing's imposition of duties on $60 billion worth of US goods meanwhile took effect Saturday.

The move, which came in retaliation for Washington raising its tariffs on $200 billion in Chinese goods, is the latest round in a bruising battle between the two superpowers.

Referring to "the never-ending game of tariff tag", OANDA senior market analyst Edward Moya said there were fears "we could see a global recession by the middle of next year if the US imposes additional tariffs on China and Mexico".

As US-China talks have stalled, the dispute has spread beyond trade, with the US targeting Chinese tech giant Huawei over national security concerns, and Beijing threatening to also single out "unreliable" foreign companies.

In a sign of its unwillingness to cede too much ground, Chinese Defence Minister General Wei Fenghe on Sunday said that "if the US wants to talk, we will keep the door open. If they want to fight, we are ready".

There are still hopes however that Trump and Chinese President Xi Jinping will meet during the G20 summit this month to jumpstart negotiations.

Trump's trade wars have also sent oil markets plunging, but crude prices rebounded temporarily Monday after Saudi energy minister Khalid Al-Falih told Arab News in an interview: "We will do what is needed to sustain market stability beyond June.

"To me, that means drawing down inventories from their currently elevated levels."

Oil prices headed lower again in late trade, after falling sharply last week as the outlook for global growth darkened.

Gold was on a tear meanwhile, climbing to $1,319.81 an ounce, its highest level since late March.

"Gold and silver have extended their gains today, boosted largely by ongoing "risk-off" trade in the equity markets," noted Fawad Razaqzada at Forex.com.

- Key figures around 1630 GMT -

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London - FTSE 100: UP 0.3 percent at 7,184.80 points (close)

Frankfurt - DAX 30: UP 0.6 percent at 11,792.81 (close)

Paris - CAC 40: UP 0.7 percent at 5,241.46 (close)

EURO STOXX 50: UP 0.6 percent at 3,300.22

Tokyo - Nikkei 225: DOWN 0.9 percent at 20,410.88 (close)

Hong Kong - Hang Seng: FLAT at 26,893.86 (close)

Shanghai - Composite: DOWN 0.3 percent at 2,890.08 (close)

New York - Dow: DOWN 0.2 percent at 24,755.56

Pound/dollar: flat at $1.2629

Euro/pound: UP at 88.80 pence from 88.41 pence at 2100 GMT Friday

Euro/dollar: UP at $1.1215 at $1.1167

Dollar/yen: DOWN at 108.25 yen from 108.35 yen

Oil - Brent Crude: DOWN 57 cents at $61.42 per barrel

Oil - West Texas Intermediate: DOWN 16 cents at $53.34 per barrel