Europe markets stumble on China tariff fears

World equities stumbled yesterday as investors feared that the United States will ramp up its trade war with China by imposing fresh tariffs, dealers said.US jobs creation figures and wage increases, reported before US markets opened, came in higher than expected, strengthening the case for an early Fed rate increase, boosting the dollar and weighing on bond prices.London closed lower, underperforming its peers thanks to a strong pound, while Frankfurt and Paris managed to recover late in the session, closing flat and slightly lower, respectively.In London, the FTSE 100 closed down 0.6% to 7,277.70 points; Frankfurt — DAX 30 ended down 0.4% to 11,959.63 points and Paris — CAC 40 closed up 0.2% to 5,252,22 points yesterday.Wall Street was also a touch weaker approaching midday in New York, but off opening lows.“US stocks are mixed after battling back from early weakness that came courtesy of festering global trade uncertainty and a stronger-than-expected wage component of the August nonfarm payroll report that appeared to revive Fed uncertainty,” analysts at Charles Schwab said.A Fed rate hike later this month is “highly-expected”, they said, but December is in question.Among individual stocks, Tesla fell sharply after a pair of executive departures added to uncertainty surrounding the electric car maker a day after chief executive Elon Musk appeared in an interview smoking marijuana.Markets have suffered heady losses in the first week of September, as investors worry over contagion from the ongoing emerging markets crisis — and the US-China trade spat.“There were no signs of an end of the week recovery, with September getting off to the worst start possible for the European indices,” said Spreadex analyst Connor Campbell.“Alongside the general market malaise — informed by the potential escalation of the US-China trade war and the sorry state of the emerging markets — the FTSE has been hampered by the pound’s recent performance, with the currency rising following signs of a Brexit breakthrough.”The pound won a boost this week from rekindled hopes of a long-awaited trade deal between London and Brussels, ahead of Britain’s scheduled departure from the European Union next March.The stronger pound however tends to dent London’s benchmark FTSE 100 shares index because it weighs on the profits of multinationals.While emerging market contagion fears continue to stalk trading floors, Donald Trump’s protectionist drive returned to the fore following an indication Japan was next in the firing line, while Nafta talks with Canada amble along.There was some relief that Trump did not immediately impose levies on $200bn of Chinese goods after the passing of a deadline for a public consultation.The threatened tariffs would add to the $50bn in imports already targeted and mark a major step up in the long-running battle between the world’s top two economies.Beijing has warned it will immediately retaliate against any measures, fuelling fears of an all-out trade war that is already showing signs of causing a drag on the global economy.