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Global Stocks Slip on Doubts About China-U.S. Tariff Talks

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11/13/2019 | 06:21am EST

By Anna Isaac and Joanne Chiu

-- Hang Seng drops 2%

-- U.S. 10-year Treasury yield falls

-- U.S. futures slip

Global stocks moved lower Wednesday after stumbling blocks emerged in trade talks between the U.S. and China.

Major indexes across Asia fell, and ongoing political unrest in Hong Kong drove the Hang Seng lower by 1.8%. Japan's Nikkei 225 was down 0.9%. In Europe, the Stoxx Europe 600 dropped 0.6%, while other regional indexes also slipped. The FTSE 100 fell 0.6%, while Germany's DAX dropped 0.8%. U.S. futures slipped, with contracts tied to the Dow Jones Industrial Average down 0.4%.

A question hanging over trade talks is whether Washington will agree to remove existing tariffs on Chinese imports to secure an initial deal with Beijing, rather than just lifting the threat of further levies due December 15.

"In the short term the market's been too optimistic. The best interpretation of the trade situation is that almost everything that can be tariffed has been tariffed," said Christopher Mahon, director of asset allocation research at Barings.

Ongoing trade concerns weighed on assets that are sensitive to global growth prospects. The benchmark for world oil prices, Brent Crude, fell 1.2% Wednesday. Shares in auto makers and parts providers, which have been particularly exposed to trade tensions, fell 2% on the Stoxx Europe 600.

Meanwhile havens rallied. Yields on sovereign bonds fell. The yield on the U.S. 10-year Treasury fell to 1.879%, down from 1.909% Tuesday. Gold climbed 0.9%, and the Swiss Franc was 0.3% stronger against the dollar.

Stocks fell in Hong Kong as unrest gripped the city, including parts of the financial district, for a third straight weekday.

"The escalation of violence has caused some market jitters," said Daryl Liew, head of portfolio management at REYL Singapore.

The Hang Seng's fall Wednesday put its losses this week to 3.9%. Insurer AIA Group Ltd. led declines on the flagship index with a 3.2% fall. Selling financial products to mainland visitors in Hong Kong is an important line of business for AIA. Elsewhere, real-estate firm Sun Hung Kai Properties Ltd. shed 2.4%.

Mr. Liew said global shares were richly valued and uncertainties over global growth and the trade talks could dent investors' risk appetite.

In Europe, banks were the worst performing sector in the Stoxx Europe 600, down 2.1%. The drop was led by Spanish banks, after the leading socialist party, Podemos, moved toward forming a new government coalition.

Podemos has pledged to raise taxes on banks and block privatizing Bankia SA's, one of the country's largest lenders. Its shares fell 4.6%. Banco Santander SA dropped 3.2%.

Markets will get an update on price growth in the U.S. on Wednesday when the October consumer-price index is released by the Labor Department. Later, Federal Reserve Chairman Jerome Powell gives testimony to Congress's Joint Economic Committee. Lines of questioning for Mr. Powell might include the Fed's expected pause on interest-rate cuts and the overall health of the U.S. economy.

Separately, policy makers Neel Kashkari of the Minneapolis Fed and Thomas Barkin of the Richmond Fed are also set to deliver speeches.

Technology giant, Cisco Systems Inc., will report earnings later Wednesday.

Write to Anna Isaac at anna.isaac@wsj.com and Joanne Chiu at joanne.chiu@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AIA GROUP LIMITED 1.03% 78.2 End-of-day quote.20.31%
ALLIED PROPERTIES (H.K.) LIMITED 0.00% 1.54 End-of-day quote.-8.88%
BANCO SANTANDER, S.A. -0.60% 3.5615 End-of-day quote.-9.82%
BANKIA, S.A. 0.48% 1.7795 End-of-day quote.-30.82%
CISCO SYSTEMS 0.48% 44.265 Delayed Quote.1.78%
DAX 0.58% 13146.74 Delayed Quote.23.79%
DJ INDUSTRIAL 0.01% 27876.52 Delayed Quote.19.52%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.0.00%
HANG SENG 0.59% 26628.78 Real-time Quote.2.42%
LONDON BRENT OIL -0.47% 63.83 Delayed Quote.16.84%
NASDAQ 100 0.51% 8395.49799 Delayed Quote.32.66%
NASDAQ COMP. 0.40% 8648.696191 Delayed Quote.30.46%
NIKKEI 225 -0.08% 23391.86 Real-time Quote.16.69%
S&P 500 0.24% 3139.35 Delayed Quote.24.96%
STOXX EUROPE 600 0.22% 406.22 Delayed Quote.20.64%
STOXX EUROPE 600 NR 0.22% 876.31 Delayed Quote.24.17%
SUN HUNG KAI & CO. LIMITED -0.85% 3.48 End-of-day quote.-5.18%
SUN HUNG KAI PROPERTIES LIMITED -0.35% 112.9 End-of-day quote.1.62%
WTI -0.34% 58.85 Delayed Quote.29.85%
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