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European Stocks Are Falling Because China Is Angry At the U.S. Over Hong Kong Legislation

European stocks are weaker in holiday-thinned trading. Fresh signs of tensions between the U.S. and China are making investors angry.

European markets are slipping as investors fret that U.S.-China trade talks could become troubled after China reacted angrily to legislation supporting Hong Kong protesters in Washington.

European stocks fell in holiday-thinned trading on Thursday, with investors rattled by fresh signs of tensions between the U.S. and China.

The Stoxx Europe 600 slipped 0.2% to 408.82, after logging a new 52-week high on Wednesday, with a gain of 0.3%.

The German DAX fell 0.3% and the French CAC 40 lost 0.3%. The U.K. FTSE 100 dropped 0.5% as the British pound rose after a YouGov poll for the Times showed Prime Minister Boris Johnson’s Conservative Party will win the December 12 election with a comfortable majority.

European stocks slipped and U.S. stock futures were pointing to losses as China threatened unspecified retaliation after President Donald Trump signed a bill supporting Hong Kong protesters on Wednesday.

China’s angry reaction has cast some doubt on the possibility of the two sides reaching a phase one agreement in time for the next round of U.S. tariffs to hit China on December 15.

Banks led the declines in Europe, with shares of HSBC Holdings down 0.9%, while trade-sensitive autos such as Daimler and Volkswagen fell under 1% each.

French drinks maker Rémy Cointreau fell after first-half results missed already lowered market expectations.

Virgin Money U.K. soared 13% after the financial services group results came in slightly better than expected.

Telefónica gained 1.2% after the Spanish telecoms group announced a major restructuring, which it said will generate more than 2 billion euros ($2.2 billion) in additional revenues by 2022.

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