Global stocks fall amid trade, growth worries

Traders work on the floor at the New York Stock Exchange (NYSE) on Wall Street where equities finished the week lower amid worries over slowing growth and the US-China trade war [Photo, AFP]

Global stocks fell Friday on worries about the grinding US-China trade war amid rising gloom over the global growth outlook.

Leading bourses in Europe lost more than one percent, including in Milan after Italian Interior Minister Matteo Salvini pulled support for the government coalition and called for snap elections while parliament was on summer recess.

Wall Street stocks dove after US President Donald Trump said he might cancel trade talks with China scheduled for September and that the US would not do business with Chinese tech company Huawei.

US equities later staged a partial rebound due to bargain-hunting, but finished the day and week lower.

"The trade back and forth between the US and China is huge on the market," said FTN Financial's Chris Low, who also cited heightened recession risk as a drag on stocks.

In other markets, the British pound fell to fresh lows after Britain reported its first economic contraction in nearly seven years, while oil prices rallied on talk Saudi Arabia will move to boost oil prices.

Relations between the US and China have soured further in the past week after Trump announced a new round of punitive tariffs on Chinese goods, despite a truce agreed with President Xi Jinping in May, and Beijing responded by halting all purchases of US agricultural goods.

The US Treasury then declared China a currency manipulator, after the yuan lost value in the face of the new round of tariffs due to take effect September 1.

Economists have warned that the protracted trade war would weigh on global growth, an outcome also suggested by other data Friday.

Fresh data showed a massive slump in German exports in June compared with a year ago, rounding off a run of weak data pointing to a shaky second quarter.

Official British data released Friday showed the country's gross domestic product (GDP) fell 0.2 percent in the second quarter, the first time it has contracted in almost seven years.

Another decline in the third quarter would put Britain in recession ahead of the nation's expected withdrawal from the EU on October 31.

"All in all, today's disappointing GDP figure is set to raise alarm bells over Brexit dragging the UK economy deeper into the abyss," said Lukman Otunuga, senior research analyst at FXTM.