BANGKOK (AP) — Shares retreated in Europe and Asia on Monday after talks between the U.S. and China wrapped up without an agreement, as economist said the escalating dispute over trade and technology would likely hurt growth.
The CAC 40 in Paris dropped 0.5% to 5,300.81 while Germany's DAX gave up 0.7% to 11,979.22. The FTSE 100 in Britain edged 0.1% lower to 7,199.50. New York shares looked set for losses, with the future contract for the Dow Jones Industrial Average down 1.1% at 25,668.00, while that for the S&P 500 lost 1.3% to 2,850.90.
Oil prices surged after Saudi Arabia said two of its oil tankers were sabotaged in the Gulf of Oman near the coast of the United Arab Emirates. The kingdom said the unspecified act of sabotage did not lead to any casualties or oil spills, but the attack Sunday raised concerns about the security of oil supplies.
U.S. benchmark crude oil added 78 cents to $62.44 per barrel in electronic trading on the New York Mercantile Exchange. It lost 3 cents to $61.66 on Friday. Brent crude, the international standard, gained $1.14 to $71.76 per barrel.
China said it would take unspecified countermeasures after U.S. tariffs on $200 billion of its exports rose to 25% from 10% as of Friday. After trade talks broke up later in the day, U.S. officials said they were preparing to expand those tariffs to cover another $300 billion of goods, covering most imports from China.
By late Monday, Beijing had not indicated what it would do, adding to uncertainty in the standoff.
"The U.S. sharply hiking tariffs on Chinese imports and China threatening to retaliate has thrown into doubt the possibility of the two sides reaching a deal after almost a year of talks," Jasper Lawler of LCG said in a commentary.
The Shanghai Composite index fell 1.2% to 2,903.71. Japan's Nikkei 225 index gave up 0.7% to 21,191.28 and Australia's S&P ASX 200 declined 0.2% to 6,297.60. South Korea's Kospi fell 1.4% to 2,079.01, while the Sensex in India lost 0.1% to 37,420.03. Hong Kong's markets were closed for a holiday. Shares also fell in Taiwan and Southeast Asia.
China's head envoy to last week's trade talks, Vice Premier Liu He, said before leaving Washington on Friday that Beijing would not compromise on matters of principle and that tariffs on Chinese exports to the U.S. should be lifted as a condition for striking a deal.
But Liu downplayed the level of tensions, saying China could cope with the challenges posed by the trade dispute.
Still, the tariffs war has been hammering Chinese manufacturers and is an added drag on growth for the region.
"Further trade talks cannot remedy the sharply increased uncertainty over Chinese and regional growth," Mizuho Bank said in a report. "Meanwhile, the escalation in tariffs is also likely to undermine the global growth outlook (and) create more acute pressures on global equities," it said.
The trade tensions have prompted investors to seek refuge in traditional safe havens, including the Japanese yen.
The dollar slipped to 109.71 Japanese yen from 109.96 yen on Friday. The euro rose to $1.1233 from $1.1231.