European stocks sink, gold hits high on escalating tariff fears
LONDON: European stock markets slid further on Tuesday, while precious metals hit fresh peaks on fears of a US-EU trade war fuelled by Donald Trump's tariff threat over opposition to his grab for Greenland.
Asia's main equity indices closed mixed, while US equity futures were sharply down, indicating sizeable losses on Wall Street when it reopens after Monday's close because of the Martin Luther King holiday.
Gold, seen as a safe-haven investment, notched yet another record high, at $4,726.70 an ounce.
Silver also peaked, touching $95.51 an ounce.
The dollar retreated and key bond yields in the United States and elsewhere climbed.
"The US dollar is not serving as a safe haven because it seems to be entirely US-driven and raises fears about US policy and European exposure to US assets," noted Neil Wilson, investor strategist at Saxo UK.
When Wall Street reopens, the "Nasdaq looks set to chalk up the biggest declines amid concern about possible retaliatory action from Europe against America's big tech contingent", predicted AJ Bell investment director Russ Mould.
Frankfurt led losses in Europe, shedding 1.5% in midday deals. There were sizeable falls also in London and Paris.
After a bright start to the year fuelled by fresh hopes for the artificial intelligence sector, investors have taken fright since the US president ramped up his demands for the Danish autonomous territory, citing national security.
With Copenhagen and other European capitals pushing back, Trump on Saturday said he would impose 10% levies on eight countries -- including Denmark, France, Germany and Britain -- from February 1, lifting them to 25% on June 1.
Mistake
The move has raised questions about the outlook for last year's US-EU trade deal.
EU chief Ursula von der Leyen on Tuesday warned the United States that hitting allied European nations with punitive tariffs over Greenland would be a "mistake".
"The proposed additional tariffs are a mistake, especially between long-standing allies," von der Leyen told the Davos gathering in Switzerland.
"The European Union and the United States have agreed to a trade deal last July. And in politics as in business -- a deal is a deal. And when friends shake hands, it must mean something," she added.
US Treasury chief Scott Bessent on Monday said that any retaliatory EU tariffs would be "unwise".
Trump meanwhile, ramped up his rhetoric against France on Tuesday, warning he would impose 200% tariffs on French wine and champagne over its intentions to decline his invitation to join his "Board of Peace" set up to oversee the rebuilding of Gaza.
- Key figures at around 1100 GMT -
London - FTSE 100: DOWN 1.2% at 10,075.62 points
Frankfurt - DAX: DOWN 1.5% at 24,578.77
Paris - CAC 40: DOWN 1.3% at 8,009.37
Tokyo - Nikkei 225: DOWN 1.1% at 52,991.10 (close)
Hong Kong - Hang Seng Index: DOWN 0.3% at 26,487.51 (close)
Shanghai - Composite: FLAT at 4,113.65 (close)
New York - Dow: Closed Monday for holiday
Euro/dollar: UP at $1.1732 from $1.1641 on Monday
Pound/dollar: UP at $1.3478 from $1.3428
Dollar/yen: DOWN at 157.85 yen from 158.09 yen
Euro/pound: DOWN at 86.04 pence from 86.71 pence
Brent North Sea Crude: UP 0.4% at $64.18 per barrel
West Texas Intermediate: UP 0.4% at $59.56 per barrel
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By RSS/AFP
