By Harry Robertson and Kevin Buckland
LONDON/TOKYO (Reuters) -European stocks and U.S. futures fell on Thursday as investors turned their attention back to escalating global trade tensions, although further signs of an easing in U.S. price pressures limited declines.
The pan-European STOXX 600 index dipped slightly after rising 0.81% on Wednesday, while Germany’s DAX index was down 0.76%.
Futures pointed to a lower start for Wall Street at the open, with S&P 500 futures losing 0.2% and Nasdaq futures off 0.35%.
In Asia, Hong Kong’s Hang Seng fell 0.58% and Japan’s Nikkei closed 0.1% lower, giving up earlier gains.
Global stocks, led by U.S. equities, have stumbled in recent weeks, as U.S. President Donald Trump’s stop-start tariff policies sow uncertainty and worries about growth among companies and investors.
Yet beaten-down U.S. tech shares led a rebound on Wall Street on Wednesday after data showed U.S. consumer prices rose at the slowest pace since October last month.
The inflation figures were closely watched following a recent run of softer economic data, but ultimately did not capture the impact from Trump’s tariffs campaign.
U.S. producer prices in February also came in slightly weaker than expected, data released on Thursday showed.
“Markets are still being driven by Trump tariffs and U.S. growth concerns,” said Mohit Kumar, chief European economist at Jefferies.
“Beyond the growth and inflation impact of tariffs, they create uncertainty, which is negative for investment and outlook for any company involved in cross-border trades,” he said. “Our view has been that tariffs are not an inflation story but a growth story.”
Trump’s increased tariffs on all U.S. steel and aluminium imports took effect on Wednesday, drawing swift retaliation from Canada and the European Union. On Thursday, he threatened a 200% tariff on European wine and champagne.
Gold climbed for a third straight session to as high as $2,949, closing in on the record high of $2,956.15 from February 24.
The U.S. dollar index <=USD> rose 0.35% to 103.95, while 10-year Treasury yields ticked up 2 basis points to 4.332%.
Investors were also keeping an eye on wrangling over a possible, partial, U.S. government shutdown.
The U.S. S&P 500 index is now down almost 5% for the year. European stocks have fared better, supported by governments’ plans for major spending on defence and a potential Ukraine peace deal, and are up more than 6% year to date despite slipping in recent weeks.
“This… still strikes me as a market that simply cannot hold onto any gains at the moment, which should be a big old red flag for any potential dip buyers out there,” said Michael Brown, senior research strategist at Pepperstone.
The yen was flat at 148.19 per dollar. Meanwhile the euro fell 0.51% to $1.0833, retreating further from the five-month high of $1.0947 touched on Tuesday.
Germany’s outgoing lower house of parliament was holding a special session on Thursday to debate a 500 billion euro ($543.85 billion) fund for infrastructure and sweeping changes to borrowing rules.
Crude oil fell after rallying on Wednesday, with Brent crude futures down 0.68% at $70.47 a barrel.
($1 = 0.9194 euros)
(Reporting by Harry Robertson in London and Kevin Buckland in Tokyo; Editing by Jacqueline Wong, Sam Holmes, Sharon Singleton and Rachna Uppal)
