Stocks Mostly Slide On US-China Tensions, Virus Warning

Stock markets fell back Wednesday in Europe and Asia as rising tensions between the United States and China overshadowed previous gains from hopes for a coronavirus vaccine.

The atmosphere was also heavy owing to comments by US President Donald Trump that the coronavirus crisis in the US was likely to "get worse before it gets better".

His decision to close a Chinese consulate in Houston set the tone for tense trades outside the US.

European equities slid lower after Beijing said it had been ordered to close its consulate, escalating a standoff between the superpowers.

The move comes with the two at loggerheads on a laundry list of issues, from trade to Beijing's handling of the coronavirus pandemic and its policies in Hong Kong, Xinjiang and the South China Sea.

Trump had already issued the gloomy virus warning in his first formal White House briefing since the end of April.

"It will probably, unfortunately get worse before it gets better," Trump told reporters as the US toll from COVID-19 rose above 141,000 people.

"European markets (are) scared by Donald Trump's claim," Spreadex analyst Connor Campbell noted.

"After all, if Trump has now dropped his long-held stance that everything is okay, then it is probably time to really be concerned."

As European markets closed, London stocks had given up 1.0 percent, Paris had lost 1.3 percent and Frankfurt had shed 0.5 percent.

The stock exchange in New York was higher in midday trading however, with the Dow Jones index 0.4 percent stronger as traders anticipated results from Microsoft and Tesla that were to be announced after trading had ended.

In Asia, Hong Kong led losses, tumbling 2.3 percent also after figures showed another record rise in new virus infections in the city -- which has fanned fears of tighter restrictions.

Tokyo shed 0.6 percent and Sydney lost 1.3 percent, but Shanghai rose 0.4 percent.

The spike in China-US tensions, expectations that interest rates will remain low for some time, and ongoing COVID-19 uncertainty have also led traders into gold.

While there are concerns about lawmakers' lack of progress on a new stimulus, Donald Trump said he is confident it will be passed AFP / JIM WATSON

The precious metal -- which is considered a safe bet in times of economic and geopolitical turmoil -- sat just above $1,864 an ounce on Wednesday and is approaching its record high above $1,900.

The rally in gold, which is up almost a quarter this year, also helped drive silver briefly to a seven-year pinnacle at $22.84 per ounce.

London - FTSE 100: DOWN 1.0 percent at 6,207.10 points (close)

Frankfurt - DAX 30: DOWN 0.5 percent at 13,104.25 (close)

Paris - CAC 40: DOWN 1.3 percent at 5,037.12 (close)

EURO STOXX 50: DOWN 1.0 percent at 3,370.76

New York - Dow: UP 0.4 percent at 26,948.18

Tokyo - Nikkei 225: DOWN 0.2 percent at 22,751.61 (close)

Hong Kong - Hang Seng: DOWN 2.5 percent at 25,057.94 (close)

Shanghai - Composite: UP 0.4 percent at 3,333.16 (close)

West Texas Intermediate: DOWN 0.5 percent at $41.37 per barrel

Brent North Sea crude: DOWN 0.5 percent at $43.80 per barrel

Euro/dollar: UP at $1.1582 from $1.1527 at 2100 GMT