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Europe Stocks Track Asia Declines as Bonds Retreat

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The tone across markets was decidedly risk-off on Tuesday, with European stocks following Asian peers lower as traders grappled with worries around trade, growth and geopolitics. A bond selloff deepened and the dollar and oil were steady.

The Stoxx Europe 600 Index fell a second day as most national gauges in the region retreated. Equity benchmarks dropped in Hong Kong, Korea and Australia, and were little changed in Japan. Stocks were mixed in China and Hong Kong after data showed slowing investment. The greenback was fractionally higher as Treasury yields once again climbed above 3 percent. The euro managed to eke out a gain even as growth data out of Germany disappointed.

What began as a selloff in European bonds on Monday — off the back of hawkish comments from an ECB official — picked up steam through the U.S. session and has carried through to Asia. Rising yields, a stronger dollar and sliding stocks are fast becoming a familiar and uncomfortable cocktail for investors. Now violence in the Middle East, the U.S.-China trade spat, uncertainty on Italy’s government and global growth concerns are helping cement the prevailing sentiment.

Elsewhere, the Turkish lira hit a new low after President Recep Tayyip Erdogan said he intends to tighten his grip on the economy and take more responsibility for monetary policy if he wins an election next month.

These are some key events to watch this week:

China plans to send Vice Premier Liu He to Washington for more trade talks.

European Union Chief Brexit negotiator Michel Barnier briefs European affairs ministers on the status of talks with the U.K.

U.K. Prime Minister Theresa May meets with her Brexit cabinet Tuesday to discuss plans for a post-withdrawal customs union.

U.S. retail sales, industrial production are due this week.

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index declined 0.3 percent as of 8:08 a.m. London time, the lowest in a week on the largest drop in more than a week.

Futures on the S&P 500 Index fell 0.3 percent, the first retreat in almost two weeks.

The MSCI All-Country World Index declined 0.3 percent, the first retreat in a week and the largest drop in more than a week.

The U.K.’s FTSE 100 Index declined 0.3 percent, the biggest drop in more than a week.

Germany’s DAX Index fell 0.3 percent, the largest fall in a week.

The MSCI Emerging Market Index decreased 0.9 percent, the first retreat in more than a week.

The MSCI Asia Pacific Index sank 0.6 percent, the largest decrease in almost three weeks.

Currencies

The Bloomberg Dollar Spot Index increased less than 0.05 percent.

The euro gained 0.1 percent to $1.1933.

The British pound climbed less than 0.05 percent to $1.3557, the strongest in more than a week.

The Japanese yen fell 0.2 percent to 109.85 per dollar, the weakest in two weeks.

Bonds

The yield on 10-year Treasuries increased two basis points to 3.02 percent, the highest in almost three weeks.

Germany’s 10-year yield climbed two basis points to 0.63 percent, the highest in almost three weeks.

Britain’s 10-year yield gained two basis points to 1.491 percent, the highest in almost three weeks.

Commodities

West Texas Intermediate crude dipped 0.2 percent to $70.84 a barrel.

Copper declined 0.3 percent to $3.08 a pound.

Gold decreased 0.1 percent to $1,311.54 an ounce, the weakest in almost two weeks.

Source: Bloomberg