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Stocks mostly down as US-China trade spat rages; Italian bond yields dip

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Stocks mostly down as US-China trade spat rages; Italian bond yields dip

SNL Image

? Chinese stocks fall amid trade tensions.

? Sterling, lira fall against dollar.

? Ten-year Treasurys stable.

? S&P 500 set to open flat.

Most European stock markets fell following a weak session in Asia as trade disputes between the U.S. and China rage on. The yen strengthened against the dollar while sterling traded lower. Oil was relatively flat, gold rose and futures point to a muted opening for Wall Street.

The Shanghai SE Composite closed 1.27% lower earlier today after the Trump administration said it would move forward with imposing 25% tariffs on $16 billion of Chinese imports Aug. 23, in the latest development of the trade dispute between the two economies. China's trade surplus with the U.S. dipped slightly to $28.09 billion in July from $28.97 billion in June, and the country's total foreign trade surplus fell to $28.1 billion in July from $41.5 billion in June.

Japan's Nikkei 225 slipped 0.08%, while Hong Kong's Hang Seng index added 0.39%. In Europe, the German DAX index was down 0.12% as of 6:14 a.m. ET, France's CAC 40 fell 0.09% and the FTSE 100 advanced 0.59% from yesterday's close.

Futures point to a muted opening for the S&P 500 and the Nasdaq 100, with 21st Century Fox Inc. among those reporting earnings. Overnight, Tesla Inc.'s shares surged nearly 11% after CEO Elon Musk confirmed his interest in taking the carmaker private, citing short selling as a factor.

"It is no secret that Musk has undergone a great deal of criticism in recent months for his at times flippant attitude to investor concerns, about the amount of money that the company is losing," Michael Hewson, chief market analyst at CMC Markets UK, noted. "He should be careful what he wishes for, as he may find that it is hotter in the fire of private ownership than it is in the frying pan of public shareholders."

The yen appreciated 0.38% against the dollar as a summary of opinions at the Bank of Japan's July monetary policy meeting showed that board members had diverged on how far yields should be allowed to move from the central bank's target. The euro was little changed and sterling depreciated 0.48% versus the dollar.

The Turkish lira weakened 0.98% against the dollar as Turkish and U.S. officials are set to meet in Washington as the Trump administration considers its trade policy toward Turkey, amid growing tensions between the two countries. It may be too early to expect significant progress on the bilateral relations and selling pressure is likely to continue on the lira, strategists at ING Research said.

"It is now looking more likely than not that the Turkish central bank will need to raise interest rates in the next week or two to shore up the lira," Capital Economics said in a research note.

Treasurys were steady as 10-year yields stood at 2.977%, while 10-year German Bund yields stood at 0.410%. Ten-year yields on Italian government bonds dipped 5 basis points to 2.822% as Italian Economy Minister Giovanni Tria said his country would grow lower this year than previously forecast and record a higher deficit in 2019.

Brent crude oil was little changed at $74.66 per barrel on the ICE Futures Exchange. Gold rose 0.06% to $1,211.73 per ounce.

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The day ahead:

8:45 a.m. ET — U.S. Federal Reserve's Tom Barkin speaks

10:30 a.m. ET — U.S. EIA petroleum status report

5 p.m. ET — Reserve Bank of New Zealand announcement (Econoday consensus: no change)

7:50 p.m. ET — Japan machine orders (Econoday consensus: -1.0% monthly)

9:30 p.m. ET — China consumer price index (Econoday consensus: 1.9% yearly)

9:30 p.m. ET — China producer price index (Econoday consensus: 4.4% yearly)