Trade war fears fuel turmoil on markets

STOCK markets around the world tumbled as investors fretted over the consequences of a looming global trade war.

US President Donald Trump was set to slap punishing tariffs on another £250bn of imports from China at midnight in Washington, as the two countries struggled to reach an agreement.

Markets suffered fresh sell-offs over fears there could be a retaliation by Beijing.

The blue chip FTSE 100 index closed down 0.9pc or 63.59 points at 7207.41.

In America, the Dow Jones dropped as much as 435 points, before recovering some of this lost ground to close down 134 points or 0.5pc.

China’s top trade negotiator Liu He landed in Washington last night for two days of talks, and Trump said that he still hopes a compromise is possible.

He also claimed that Chinese premier Xi Jinping had written to him offering to try to resolve their differences over trade.

Trump said: ‘He just wrote me a beautiful letter, I just received it, and I’ll probably speak to him by phone.’

However, the President added that his alternative plan of higher tariffs is ‘excellent’ if no agreement can be reached.

Earlier in the day, China’s commerce ministry had struck a defiant note. Spokesman Gao Feng said: ‘The US has assigned a lot of labels, such as backtracking, going back on one’s word, and so on.

‘Lots of promises have been foisted on China.

‘China will not capitulate to any pressure, and we have the determination and ability to defend our own interests.’

The Footsie has been on a losing streak since it reached a 2019 high of 7523.07 points on April 23.

It has since pulled back 3.4pc amid worries that the trade battle could spark a global downturn.