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By Ritvik Carvalho
LONDON (Reuters) – Global equities plummeted on Monday, with weaker-than-expected economic surveys adding to investors' worries about the unresolved effects of the US trade dispute on China over the global economy, while oil gained more 1% while tensions in the Middle East remained high.
European stock markets opened lower, as surveys of French, German and euro zone purchasing managers were weaker than expected. The pan-European STOXX 600 index was down 0.9%.
A survey revealed Monday that euro area business growth was slowing down, less than two weeks after outgoing ECB President Mario Draghi promised an indefinite stimulus to revive the troubled economy of the bloc. .
The euro fell 0.4% to 1.0966 USD after the publication of the German PMI (Purchasing Managers' Index) index, its lowest level since more than a week relative to the dollar.
The German DAX index reached its lowest level in nearly two weeks, down 1.35% after euro area data, while the French CAC 40 lost nearly 1%.
The MSCI All Country World Index, which tracks stocks in 47 countries, has lost 0.25%.
Oil prices have risen due to doubts as to how quickly Saudi Arabia could restore its total crude output after the attack that took place earlier this month on its largest facility treatment.
Brent crude futures – the international benchmark for oil – reached $ 65.50 a barrel, a gain of more than 1%. They traded for the last time half a percent higher at $ 64.59.
"Given that Germany has already contracted in the second quarter, today's numbers actually increase the risk of a new negative quarter in the third quarter, which would constitute by definition a technical recession, "said Marios Hadjikyriacos, investment analyst at XM.
"It seems that the malaise in the manufacturing sector – due to Brexit's trade and concerns – has begun to spread to the much larger service sector as well."
Most Asian equity markets slid as investors waited for more details on trade negotiations between the United States and China.
The market climate was fragile, with civil unrest in Hong Kong and the concern that a trade deal between the United States and China may take a long time to materialize. Movements were further exaggerated by weak volumes as Japanese markets were closed for a holiday.
The MSCI's broadest share of Asia Pacific ex-Japan is down 0.2% at 510.04 points. It is still up more than 3% so far in September.
US equity futures – up 0.4% previously – fell after PMI data in Europe. The S & P 500 E-mini futures were down 0.2%.
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Over the weekend, the office of the US Trade Representative issued a brief statement calling the "days of talks with China" productive ". He added that a business meeting at the main level in Washington would take place in October, as previously planned.
In a brief statement, the Chinese Ministry of Commerce called the talks "constructive" and said they also had a good discussion on the "detailed arrangements" for the high-level talks in October.
In addition, the United States has removed tariffs on more than 400 Chinese products in response to requests from US companies.
Despite improving the tone, the markets are still not convinced of the possibility of an imminent transaction.
"The impact of the trade dispute on the economies is causing real concern," said Sydney-based strategist Michael McCarthy of CMC Markets.
"People probably have the idea that it will be a long negotiation, and the longer it lasts, the more economic impact it will have."
Investors were surprised Friday by the news that the Chinese authorities had unexpectedly canceled a visit to US farms this week after their two days of negotiations in Washington.
In the Middle East, the Saudi-led coalition killed five Yemeni civilians during air strikes, which worsened investor appetite.
US Crude Oil futures reached $ 58.36 per barrel, up 0.5%.
The Pentagon has ordered additional troops to be deployed in the Gulf region to strengthen Saudi Arabia's anti-aircraft and anti-missile defenses as a result of an attack on Saudi oil facilities.
US Secretary of State Mike Pompeo said on Sunday that additional troops were meant for "deterrence and defense" and that Washington aimed to avoid war with Iran.
Markets will closely monitor the September US manufacturing survey expected later in the day.
In currencies, the dollar gained 0.25% against a basket of currencies.
The pound was down 0.3% to $ 1.2431. The British Supreme Court is to decide this week whether Prime Minister Boris Johnson acted illegally by suspending parliament for five weeks.
(Report by Ritvik Carvalho, additional report by Swati Pandey in Sydney, edited by Catherine Evans)
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