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Markets tumble as Huawei arrest rekindles US-China trade fears

AFP  |  London 

World markets slumped Thursday as the arrest of a top at Chinese raised doubts over the recent trade truce agreed by US and Chinese counterpart

Fears over the potential trade fallout saw the Frankfurt DAX index, and all shed three percent and Wall Street joined the global stocks sell-off, opening sharply lower as the Dow Jones Industrial Average slid 2.0 per cent.

The broad-based S&P 500 sank 1.9 per cent to 2,648.04, while the tech-rich shed 2.2 per cent to 7,002.02 as Wall street returned to action. The US markets were closed Monday for the funeral of former

"After some semblance of tranquility on Wednesday, markets are in the thick of it as regarding Chinese Company suggest that US-tensions are well beyond the tit for tat tariff war," said Oanda's

The markets tanked after the arrest of in for extradition to the US in an investigation into suspected sanctions violations by the company.

On the foreign exchange markets, the pound held up despite Britain lurching toward a potential no-deal Brexit. faces defeat in her bid to push a controversial agreement with the EU through parliament.

Trump and Xi had sparked a brief global markets rally on Monday after appearing to clinch a tariffs ceasefire last weekend in

But the rally ran out of steam with investors fretting over the fragile state of the world economy and Brexit uncertainty.

"Stocks have sold-off severely ... as traders are worried that US-relations have deteriorated," said

"The arrest of Huawei in over the weekend has rattled investor confidence.

"US-relations were on the mend after the summit ... and now the arrest might have thrown a spanner in the works."

Meng is the daughter of company founder Ren Zhengfei, a former Chinese People's The company has been investigated by US intelligence, who deemed it a national security threat, and such concerns have been voiced elsewhere too.

China has expressed outrage, urging and the US to "immediately correct the wrongdoing".

"This week has been wild and there's still a way to go before it is over," said

Investors are concerned that "will do irrevocable damage to the fragile trade truce", he added.

London-listed and saw their share prices drop on worries about demand from key commodity consumer China.

Brent prices meanwhile briefly tumbled below USD60 per barrel on fears of an insufficient output cut at a Vienna meeting.

"Not only were miners in deep distress over the potential for another nosedive in US-China relations, but and plunged 3.0-per cent apiece as Brent crude tumbled back under $60," Campbell noted.

members and other are mulling output cuts to prop up plunging prices, defying repeated calls by Trump that they keep the taps open.

"We're looking for a sufficient cut to balance the market, equally distributed between countries," Saudi minister told reporters in remarks interpreted by some observers as overly cautious.

"Expectations for a supply cut are high given that the has plummeted by over a third in just a little more than two months," said

"But the early indications are that the size of the reduction may not be enough to halt the market's declines."

saw tech firms hammered on Asian markets.

Hong Kong-listed ZTE, hit by a US banning order over security fears this year before that was reduced to a massive fine, was almost six percent down.

Market heavyweight Tencent, and -- a supplier to Huawei -- each plunged more than five per cent.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, December 06 2018. 23:10 IST