DEVELOPING: Stocks Bounce Back After 'China Blinks' on Trade War with US

DEVELOPING: Stocks Bounce Back After 'China Blinks' on Trade War with US

DEVELOPING: Stocks Bounce Back After 'China Blinks' on Trade War with US

Aug 5 (Reuters) - Wall Street's main indexes fell sharply on Monday, with the Dow Jones Industrial Average tumbling more than 500 points, as China's willingness to let the yuan slide in response to the latest US tariff threat fanned fears that it could further aggravate an ongoing trade war.

Global growth concerns have risen as the trade war between the world's two biggest economies the USA and China sparked a stampede into perceived "safe-haven" assets. Investors in search of safety herded into USA government bonds, which sent yields plunging.

Signals from the bond market were also daunting as the inversion of the yield curve between the three-month Treasury bill and 10-year bonds grew to the widest since April 2007.

Technology companies, which would stand to suffer in a protracted trade war, took the biggest losses.

All Dow components companies traded at red territory with Apple erasing more than 5 percent. S&P 500 e-minis were up 24.25 points, or 0.86% and Nasdaq 100 e-minis were up 75.75 points, or 1.03%. The Nasdaq fell 278 points, or 3.5%, to 7,726.

That plunge was triggered when China allowed its currency to depreciate against the dollar to its lowest level in 11 years.

It was 18 months ago when the Dow had its worst point drop - closing down 1,175.21 points after suffering a near 1,600-point intraday drop on February 5, 2018.

On Tuesday, the People's Bank of China fixed the yuan at a higher rate than anticipated, a move that helped Asian shares pull off lows and encouraged investors in Europe and the U.S. Bank of America fell 5.2%, Citigroup lost 3.2% and JPMorgan Chase dropped 3.3%.

The fall in the yuan below the politically sensitive level of seven to the dollar followed Trump's threat of tariff hikes on an additional $300 billion of Chinese imports and led to Monday's rout.

In Asia, where tensions between Seoul and Tokyo are worsening in a trade dispute entirely separate from Washington's and Beijing's, Japan's Nikkei 225 index fell 1.7%, and South Korea's Kospi lost 2.6%.

The S&P 500 lost 2.4%, as of 12:17 p.m.

Declining issues outnumbered advancers for a 7.11-to-1 ratio on the NYSE and for a 7.20-to-1 ratio on the Nasdaq.

Stocks are falling sharply on Wall Street after China let its currency sink to the lowest level in more than a decade, escalating its trade battle with the U.S.

Energy stocks dropped along with the price of crude oil.

Apple Inc slid 4.1% as analysts expected the newly proposed tariffs to hurt demand for its flagship iPhone, while the Philadelphia chip index slipped 3.5%.

Major indexes posted their biggest percentage drop of the year as a fall in the yuan following U.S. President Donald Trump's vow to impose additional tariffs on Chinese goods sparked fears of further escalation of the U.S., China trade war.

The S&P 500 fell 68 points, or 2.3%, to 2,863.

In energy markets, which often reflect expectations of global economic growth, the benchmark US crude rose 55 cents on Tuesday to $55.248 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price worldwide oils, gained 35 cents to $60.17 per barrel in London. The yield on the 2-year word sank to 1.58% from 1.71% a day earlier. The Grasp Seng in Hong Kong dropped 2.9%. "The S&P 500 rose 1.35%, and the Nasdaq climbed 1.47%", adds the site.

In Europe, France's CAC 40 fell 2.2%, and the German DAX misplaced 1.eight%.

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