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Global Markets: Stocks slump on China exec arrest, oil spills into OPEC

Reuters  |  LONDON 

By Marc Jones

(Reuters) - Global stock markets slumped for a third day running on Thursday as the arrest of a top of Chinese tech giant in for extradition to the fed fears of fresh tensions between the two economic superpowers.

The arrest of Huawei's chief financial officer, Meng Wanzhouof, who is also the daughter of the company's founder, came just as and prepared for crucial trade negotiations.

Asian markets took a beating. is not listed, but China's second-largest telecom equipment maker, ZTE Corp, sank 9 percent in Hong Kong while most of the nearby national bourses lost at least 2 percent.

London, and then slumped to 2-year lows as tech companies, banks and carmakers fell nearly 3 percent. headed for their worst day in 2 1/2 years as crude prices spilled as much as 5 percent going into an meeting in

"We had this very ugly new turn and just the degree to which the market has reacted just suggests to me that they are vulnerable right now," said John Hardy, Saxo Bank's of FX strategy. "It think we should all be very careful. It is not looking good, especially if the S&P 500 goes to new lows."

S&P 500 futures were down almost 2 percent.

Wall Street was closed on Wednesday, so there was an element of catch-up play but the strain on futures was clearly strong. CME Group's had implemented a series of 10-second trading halts in that had limited the initial drops.

Japan's Nikkei had shed 1.9 percent, closing at its lowest level since Oct. 30, with semiconductor-related shares leading the losses. is one of the world's largest makers of and

MSCI's ex-Asia-Pacific index lost 2.0 percent too. Hong Kong's Hang Seng dropped 2.5 percent and Chinese blue chips fell 2.1 percent to take their 2018 loss to 20 percent.


Traders were also waiting to hear what kind of cuts and other meeting in would make to their output in the months ahead.

Consensus among analysts was for somewhere between 1 million and 1.3 million barrels per day, but Brent dropped as much as 5 percent to back under $60 a barrel as said going into the meeting that 1 million "would be enough".

All the various spikes in volatility also shoved currency markets in all kinds of directions.

The Australian dollar, which is highly sensitive to U.S. tensions due to huge Aussie metals sales to China, shed 1 percent despite China's commerce ministry saying it was "very confident" about striking a U.S. trade deal.

It was last at $0.72 to the U.S. dollar while the greenback itself fell as much 0.4 percent against the yen to 112.77 yen as it suffered slightly too.

China's yuan was on course for its worst day in the offshore spot markets since August as it dropped to 6.9 per dollar, while the crude crunch sent like Norway's crown and Russia's rouble down just as much.

Another oil-sensitive currency, Canada's dollar, also languished near an 18-month low. It had been hit hard the day before when a cautious-sounding dampened expectations of a January rate hike.

"The concentration of the moves today is a direct function of what we have been seeing in the equity and commodity markets," said Strategist


On the Huawei drama, Canadian authorities had said they had arrested Meng in on Dec. 1, the day and Chinese met at the summit in

China's foreign ministry said neither or the had clarified the reason for the arrest, but a source earlier told it was related to violations of U.S. sanctions.

The move heightened the sense of a collision between the world's two largest economies, not just over tariffs but also over technological hegemony.

Britain's said it was removing Huawei's equipment from the core of its and 4G mobile operations. and have also rejected Huawei's products.

"The U.S. has been telling its allies not to use Huawei products for security reasons and is likely to continue to put pressure on its allies," said Norihiro Fujito, at

Yields on top-rated bonds held near six-month lows, while those on benchmark 10-year U.S. Treasuries were near a three-month low at 2.886 percent.

Adding to worries about U.S. recession risks, the Treasury yield curve remained inverted between two- and five-year zones, with five-year notes yielding 2.763 percent, below 2.778 percent on two-year notes.

U.S. jobs data is due on Friday. If the figures show any serious weakness, markets are likely to react, said Shuji Shirota, HSBC's of macro economic strategy.

(Reporting by Marc Jones, editing by Larry King)

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

First Published: Thu, December 06 2018. 18:29 IST