Shares slide on trade worries, oil gives up some gains

Global share prices fell on Monday on escalating trade tensions between the United States and major economies while crude oil prices gave up some of the hefty gains made after major oil exporters agreed to a modest increase in production.

European shares, which hit multi-week lows last week, were expected to extend declines, with financial spread-betters predicting Britain's FTSE .FTSE and Germany's DAX .GDAXI would open 0.5 percent weaker, and France's CAC .FCHI to open 0.6 percent down.

In Asia, S&P500 mini futures ESc1 eased as much as 0.6 percent while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.95 percent to 6 1/2-month lows. Japan's Nikkei .N225 lost 0.8 percent.

The Wall Street Journal reported that U.S. President Donald Trump plans to bar many Chinese companies from investing in U.S. technology firms and block additional technology exports to China.

As the threat of a full-blown trade war has become all the more real, MSCI’s gauge of stocks across the globe .MIWD00000PUS has fallen in five of the last six weeks, including last week, when it declined one percent - its biggest weekly drop in three months.

The index of global auto manufacturers .MIWO0AC00PUS remained soft after 4.7 percent fall last week,

Trump threatened to impose a 20 percent tariff on Friday on all imports of EU-assembled cars, a month after his administration launched an investigation into whether auto imports posed a national security threat.

A senior European Commission official said on Saturday that the European Union will respond to any U.S. move to raise tariffs on cars made in the bloc.

Global stocks fall for consecutive sixth day but euro in min-rebound

Global Stock Markets

Italy’s political crisis and renewed trade war fears sent world stocks lower for the sixth day in a row, though hopes that Italy could avoid a new election helped European markets stage a mini-bounce from one of their worst selloffs in years. 

Investors have in recent days scurried for assets such as U.S. and German bonds or the Japanese yen, spooked by the possibility that Italy, the third-biggest euro zone economy, could deliver a bigger boost to eurosceptic parties in a snap election that sources said could be held by end-July.

An election at this point would also be a de facto referendum on Italy’s euro membership, evoking memories of the 2011-2012 euro debt crisis and carrying huge implications for the single currency, whatever its outcome.

However, reports that the two anti-establishment parties were again renewing efforts to form a government rather than force the country back to the polls, helped Milan-listed equities snap a five-day losing streak .FTMIB.

Similarly, short-dated Italian bond yields IT2YT=RR - a sensitive gauge of political risk - fell almost half a percent from half-decade highs after suffering their worst day in nearly 26 years on Tuesday.

A pan-European equity index was flat on the day after falling almost 4 percent in the past five days.

Barclays investment strategist Hao Ran Wee said that while risks from Italy for world markets had certainly risen, there were significant hurdles for the country to sharply increase spending or exit the euro zone.

Japan’s biggest private life insurance firm, Nippon Life, which holds some 4.8 trillion yen ($44.21 billion) worth of euro zone bonds, also said it had no plans for now to buy or sell its Italian debt holdings.

Equity futures signalled a stronger open on Wall Street ESc1, after Tuesday's harsh session which saw all three U.S. indexes lose between 0.5-1.2 percent .DJI .SPX .IXIC, led by financial sector stocks.

Asian markets however remained under pressure, with an index of non-Japanese Asian stocks .MIAPJ00000PUS, hurt also by news that the United States was pressing ahead with tariffs and restrictions on investments by Chinese companies. Beijing meanwhile said it was ready to fight back if Washington ignited a trade war.

Japan's Nikkei .N225 sold off 1.5 percent to a six-week low while Shanghai shares .SSEC also dropped 1.4 percent. Trade-sensitive emerging equities fell 1.2 percent to 5-1/2-month lows.

Emerging markets are also suffering from the dollar's renewed surge since mid-April, with Indonesia raising interest rates for the second time in two weeks to support the rupiah currency IDR=.

The politics and fears of an economic hit across the euro zone has driven investors into U.S. Treasuries and German Bunds pushing yields 15-20 basis points lower They have also fuelled a sharp rise in the yen and Swiss franc, especially against the euro EURJPY=.

The euro attempted to bounce off 10-month lows against the dollar EUR=EBS rising 0.5 percent to $1.160, while against the Swiss franc and yen it firmed around 0.3 percent EURCHF=.

U.S. 10-year Treasury yields rose 6.5 basis points to 2.83 percent US10YT=RR while German yields rose around 5 basis points DE10YT=RR

Oil prices meanwhile struggled as expectations grew that Saudi Arabia and Russia would pump more oil to counter potential supply shortfalls from Venezuela and Iran, even as U.S. output has surged in recent years.

Brent futures traded around $75.50 per barrel LCOc1, well off recent 3-1/2-year highs above $80.