China's threat to retaliate against US tariffs rattles global markets
The latest turmoil comes a day after Wall Street stock indices posted their largest one-day losses so far this year.
By John-Paul Ford Rojas and Ganesh Rao, business reporters,
China has threatened "necessary countermeasures" against
planned US trade tariffs, sparking renewed volatility on global stock
markets.
The FTSE 100 tumbled by more than 100 points or 1.3% to its lowest level since February during Thursday trading - and though it later recovered some of that ground, it was still 1.1% down at the close.
It followed a bleak day on Wall Street on Wednesday when stock indices suffered their worst day so far this year - with the Dow Jones tumbling by 800 points, or 3%, as investors worried about signs a recession may be on the way.
New York shares stabilised on Thursday, with the Dow opening slightly higher thanks to better-than-expected US retail sales figures for July.
Worries about the global outlook have been stoked by the intensification of the US-China trade war and the response of bond markets, which are flashing warning signals about the prospect of a recession.
That was indicated by a phenomenon known as "yield curve inversion" - seen as a sign that investors have lost faith in the economy.
The "inversion" came when returns yielded by 10-year US and UK bonds -
parcels of government debt repaid after a set period of time - fell
below two-year bond yields this week.
It was the first time this has happened since the financial crisis more than a decade ago.
Markets have been jittery since the start of this month when Donald Trump said the US would impose 10% tariffs on $300bn (£248bn) worth of Chinese imports from September - though Washington later said a number of these would be delayed until December.
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Sentiment about the global economy has been further eroded by protests in Hong Kong and turmoil in Argentina prompted by primary election results.
This week also saw Germany reporting that its economy shrank in the second quarter, while Chinese industrial output posted its slowest growth in 17 years.
On Thursday, the Chinese government said in a statement that the latest tariffs violated a consensus reached between President Xi Jinping and Mr Trump earlier in the summer to resolve their dispute via negotiation.
A spokeswoman said in a separate statement: "We hope the US will meet China halfway."
In a radio interview, Mr Trump said: "China, frankly, would love to make a deal, and it's got to be a deal on proper terms.
"It's got to be a deal, frankly, on our terms. Otherwise, what's the purpose?"
The US president also dismissed stock market nerves.
He said: "We had a couple of bad days but... we're going to have some very good days because we had to take on China."
Hussein Sayed, chief market strategist at broker FXTM said "the countdown to a recession" had started.
He said: "No one knows when a bear market begins, but if the US and China don't reach a trade agreement soon, the chance of one is highly likely."
Chris Beauchamp, chief market analyst at IG, said: "Markets face a tough few weeks if the US and China remain at loggerheads, and trade wars are now clearly feeding through to economic and corporate data."
The FTSE 100 tumbled by more than 100 points or 1.3% to its lowest level since February during Thursday trading - and though it later recovered some of that ground, it was still 1.1% down at the close.
It followed a bleak day on Wall Street on Wednesday when stock indices suffered their worst day so far this year - with the Dow Jones tumbling by 800 points, or 3%, as investors worried about signs a recession may be on the way.
New York shares stabilised on Thursday, with the Dow opening slightly higher thanks to better-than-expected US retail sales figures for July.
Worries about the global outlook have been stoked by the intensification of the US-China trade war and the response of bond markets, which are flashing warning signals about the prospect of a recession.
That was indicated by a phenomenon known as "yield curve inversion" - seen as a sign that investors have lost faith in the economy.
It was the first time this has happened since the financial crisis more than a decade ago.
Markets have been jittery since the start of this month when Donald Trump said the US would impose 10% tariffs on $300bn (£248bn) worth of Chinese imports from September - though Washington later said a number of these would be delayed until December.
:: Listen to the Daily podcast on Apple Podcasts, Google Podcasts, Spotify, Spreaker
Sentiment about the global economy has been further eroded by protests in Hong Kong and turmoil in Argentina prompted by primary election results.
This week also saw Germany reporting that its economy shrank in the second quarter, while Chinese industrial output posted its slowest growth in 17 years.
On Thursday, the Chinese government said in a statement that the latest tariffs violated a consensus reached between President Xi Jinping and Mr Trump earlier in the summer to resolve their dispute via negotiation.
A spokeswoman said in a separate statement: "We hope the US will meet China halfway."
In a radio interview, Mr Trump said: "China, frankly, would love to make a deal, and it's got to be a deal on proper terms.
"It's got to be a deal, frankly, on our terms. Otherwise, what's the purpose?"
The US president also dismissed stock market nerves.
He said: "We had a couple of bad days but... we're going to have some very good days because we had to take on China."
Hussein Sayed, chief market strategist at broker FXTM said "the countdown to a recession" had started.
He said: "No one knows when a bear market begins, but if the US and China don't reach a trade agreement soon, the chance of one is highly likely."
Chris Beauchamp, chief market analyst at IG, said: "Markets face a tough few weeks if the US and China remain at loggerheads, and trade wars are now clearly feeding through to economic and corporate data."