European shares lower following decliine in Asian trading

European shares fell back on Thursday, tracking a decline in Asian trading as weakness in Chinese markets eclipsed optimism that a NAFTA deal could be struck by Friday’s deadline.

The pan-European STOXX 600 extended early losses to 0.5 percent by 0830 GMT, while Germany’s DAX, which is sensitive to China due to its prominence as a German export market, dropped 0.9 percent. Chinese stocks fell after activity in the factory sector likely slowed for the third straight month in August amid uncertainty over an escalating trade war with the United States. In Europe, trade-sensitive mining stocks tumbled 1.3 percent and autos fell 0.7 percent.

Overall in Europe, escalating trade disputes have driven cyclical mining and autos sectors down this year while healthcare and technology take the lead. With the second-quarter earnings season drawing to a close, companies in the MSCI Europe index have delivered 10.9 percent year-on-year earnings growth in euro terms.

Japan’s Nikkei eked out small gains after touching more than a three-month high on Thursday as positive developments in trade negotiations underpinned sentiment, but investors wasted no time taking profits from the gains in late trade.

The Nikkei share average ended 0.1 percent higher to 22,869.50, after climbing to 23,032.17 points, its highest level since May 21.

Meanwhile, start-up markets attracted buying, with the Mother market rising 1 percent and the Jasdaq market advanced 0.5 percent.

On Wednesday, the leaders of the United States and Canada expressed optimism that they could reach a new North American trade deal by a Friday deadline, although Canada warned that a number of tricky issues remained.

MSCI’s world equity index, which tracks shares in 47 countries, gained 0.39 percent while the S&P 500 and the Nasdaq U.S. stock indexes hit all-time highs.