European stocks tread water as trade caution rules

Logo of the London Stock Exchange

Key eurozone equity markets ended the day flat to slightly higher, but London lost ground as the pound strengthened against the euro, potentially undermining the competitiveness of British multinationals.

On Wall Street the Dow index was a touch weaker approaching midday in New York.

Beijing said on Wednesday it would impose 25 per cent tariffs on US$16 billion of US goods from Aug 23, retaliating in kind to a warning from US officials the day before and escalating a crisis that pits the world's top two economies against each other.

"Investors are still wondering how quickly, if at all, the tariffs so far will start to affect companies and then economies," IG analyst Chris Beauchamp told AFP.

"We know the theory, but the actual developments will take time to become clear."

"It is also not yet clear how far (the trade war) will run - until the mid-term (US elections in November)? Or further until (President Donald Trump) can really get some key concessions from China," pondered Beauchamp.

"Market resilience over the past few weeks suggests investors have calmed down for the time being, at least where US equities are concerned."

Asian stocks largely brushed off China's tit-for-tat response, with most markets rising on Thursday.

ROUBLE DIVES

The Russian rouble, meanwhile, tumbled after Washington slapped Russia with new sanctions over Moscow's alleged involvement in a nerve agent attack in Britain.

The Kremlin slammed as "unacceptable" the fresh US sanctions which analysts said probably had little connection with the trade wars Washington is waging with key trade partners.

"I don't think the Russia move is another front in the (trade) war," said Beauchamp, "since Russia is the United States' 23rd largest partner, and thus not very high on the list".

Among other emerging market currencies the Turkish lira hit new lows against the dollar as high-level talks between Ankara and Washington to defuse tensions produced no apparent breakthrough.

The battered lira has lost over 40 per cent of its value this year.

Key figures at 1540 GMT:

London - FTSE 100: DOWN 0.5 per cent at 7,741.77 points (close)

Frankfurt - DAX 30: UP 0.3 per cent at 12,676.11 (close)

Paris - CAC 40: FLAT at 5,502.25 (close)

EURO STOXX 50: FLAT at 3,494.13

New York - Dow Jones: DOWN 0.2 per cent 25,546.36

Tokyo - Nikkei 225: DOWN 0.2 per cent at 22,598.39 (close)

Hong Kong - Hang Seng: UP 0.9 per cent at 28,607.30 (close)

Shanghai - Composite: UP 1.8 per cent at 2,794.38 (close)

Euro/dollar: DOWN at US$1.1562 from US$1.1610 at 2100 GMT

Pound/dollar: DOWN at US$1.2866 from US$1.2882

Dollar/yen: DOWN at 110.87 yen from 110.98 yen

Oil - Brent Crude: DOWN 12 cents at US$72.16 per barrel

Oil - West Texas Intermediate: DOWN one cent at US$66.93 per barrel