Stocks extend losses as Hong Kong bill fuels trade fears

Stock markets extended recent losses Thursday after US lawmakers passed a bill supporting civil rights in embattled Hong Kong, jeopardising delicate Chinese-American trade talks as Beijing threatened to fight back.

Investors, already nervous about slow progress of the talks, were sent running for the hills after both houses of Congress overwhelmingly agreed to the bill and sent it to be signed by US President Donald Trump.

"A third day in the red for equity markets as the US-China trade deal, or lack of, continues to dictate market sentiment," said Craig Erlam, senior market analyst at Oanda trading group.

China on Thursday accused the United States of seeking to "destroy" Hong Kong and threatened retaliation after Congress passed legislation supporting the pro-democracy movement that has thrown the city into nearly six months of turmoil.

Foreign Minister Wang Yi said the passage of the Hong Kong Human Rights and Democracy Act "indulges violent criminals" that China blames for the worsening unrest and aims to "muddle or even destroy Hong Kong".

The city's main stocks index led the losses Thursday, closing down 1.6 percent.

"Recent moves in stock markets seem to be almost solely driven by the latest developments in US-Sino talks," said XTB chief market analyst David Cheetham.

"It's quite remarkable that stock markets in not only New York and Shanghai, but also London and Frankfurt have such a heightened level of sensitivity in the near term to any news on this front."