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GLOBAL MARKETS-Shares retreat globally on U.S.-China tensions, gold soars

Credit: REUTERS/BRENDAN MCDERMID

Shares worldwide skidded further on Friday as a pick-up in U.S. and European business activity did little to ease jitters about rising U.S.-China tensions, while gold broke above $1,900 an ounce on its march toward a record high.

    * Gold jumps above $1,900 an ounce
    * European shares set for worst day in a month
    * Markets eye escalating U.S.-China tensions
    * Intel's tumble leads tech stocks lower
    * Graphic: U.S.-China tensions: https://tmsnrt.rs/2BrVRll
    * Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

    By Herbert Lash and Tom Arnold
    NEW YORK/LONDON, July 24 (Reuters) - Shares worldwide
skidded further on Friday as a pick-up in U.S. and European
business activity did little to ease jitters about rising
U.S.-China tensions, while gold broke above $1,900 an ounce on
its march toward a record high.
    In a tit-for-tat move, Beijing ordered Washington to close
the U.S. consulate in Chengdu in retaliation for China being
told earlier this week to shut its consulate in Houston.
[nB9N2EM03G]
    Data showing business activity in the euro zone returned to
growth failed to cheer investors. German manufacturing avoided
contraction for the first time in 19 months in July with a
notable upturn in sales abroad. [nZRN000LMY][nZRN000LN9]
    U.S. data also failed to impress. U.S. business activity
rose to a six-month high in July, but companies reported a drop
in new orders as a resurgence in new COVID-19 cases across the
country weighed on demand. [nZON000MEP]
    Technology stocks <.SX8P> such as SAP SE <SAPG.DE> and ASML
Holding NV <ASML.AS> led losses in Europe, while Germany's
export-heavy DAX index <.DAX> slumped 2%.
    A 16% slide in Intel Corp <INTC.O> shares after the company
said it was six months behind schedule in developing
next-generation, power-efficient chip technology led U.S. stocks
lower. 
    While a concern, U.S.-China relations are unlikely to get
out of hand and equities will continue to grind higher, said
Teresa Jacobsen, a managing director at UBS Private Wealth
Management in Stamford, Connecticut.
    "To some extent this is saber-rattling because we have an
election coming," she said. "It's really in everyone's interest
to resolve these issues. It's not good for us, it's not good for
anyone else."
    MSCI's benchmark for global equity markets <.MIWD00000PUS>
slid 0.8%, while emerging markets stocks <.MSCIEF> fell 1.62%.
    On Wall Street, the Dow Jones Industrial Average <.DJI> fell
0.6%, the S&P 500 <.SPX> lost 0.59% and the Nasdaq Composite
<.IXIC> dropped 0.83%.    
    Overnight in Asia, Chinese blue chips <.CSI300> retreated
4.4% to wipe out a week of gains. The Chinese yuan <CNH=EBS>, a
barometer of Sino-U.S. relations, posted its worst week since
mid May.
    Gold resumed its march toward a new record peak, scaling
$1,900 for the first time since August and September 2011, when
spot prices only traded above that level on four days. The rally
has been driven by fears of an economic hit from the pandemic.
    Spot gold prices <XAU=> rose 0.70% to $1,900.16 an ounce,
less than $25 from an all-time peak in 2011.
    U.S. gold futures <GCv1> settled up 0.4% at $1,897.50.
    Analysts at RBC Capital Markets noted gold-backed exchange
traded product holdings had already reached record peaks.
    "The level of COVID-19 uncertainty, low and negative real
and nominal rates, politics and geopolitics have driven gold
prices sharply higher, and pushed allocations among investors
ever higher," they said in a note.
    The U.S.-China row put copper - a prime Chinese import - on
track for its first weekly loss since mid-May, but analysts
expect recovering demand and low stocks to keep prices high. 
    Silver, meanwhile, was en route to its best week since 1987,
up almost 18% in five days. 
    Oil prices edged higher, supported by a weaker dollar. But
U.S.-China tensions and wider economic uncertainty weighed.
    Brent crude futures <LCOc1> settled up 3 cents at $43.34 a
barrel. U.S. crude futures <CLc1> rose 22 cents to settle at
$41.29 a barrel.
    The euro <EUR=> advanced 0.40% to $1.1640, strengthened by
European Union's approval on Monday of a 750 billion-euro ($857
billion) recovery fund to revive the region's economies.
    The Japanese yen strengthened 0.82% versus the greenback at
105.98 per dollar, while the dollar index <=USD> fell 0.401%,
almost a two-year low.
    The 10-year U.S. Treasury <US10YT=RR> note fell 0.5 basis
points to 0.5872%.
       


    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
US-China tensions    https://tmsnrt.rs/2BrVRll
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Additional reporting by Wayne Cole in Sydney; Editing by Toby
Chopra, Steve Orlofsky and Tom Brown)
 ((Tom.arnold@thomsonreuters.com))

Keywords: GLOBAL MARKETS/ (WRAPUP 8, PIX)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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