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US, European stocks drop on trade fears; Argentine assets slump on poll


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US, European stocks drop on trade fears; Argentine assets slump on poll

Trump suggests planned September trade meeting may be delayed.

Argentine president's re-election bid thrown into doubt.

➤ U.S., European shares decline; Asia mixed.

➤ Italian bonds rise along with Treasurys.

U.S. and European equities declined, as traders continued to weigh a prolonged U.S.-China trade dispute and heightened uncertainties in Italian politics.

Wall Street extended last Friday's losses as U.S. President Donald Trump suggested a planned September trade meeting with China may not happen as scheduled and threatened that the U.S. will cut ties with Huawei Technologies Co. Ltd.

Italy may be headed for an election as Deputy Prime Minister Matteo Salvini aims to bring down his coalition partner's Five Star Movement in an attempt to build a right-wing coalition headed by his Northern League party. The move sets up a potential clash with the European Union over Italy's budget deficit.

Argentine President Maurico Macri lost by more than expected in a primary vote before the country holds presidential elections in October. He was beaten by populist opposition candidate Alberto Fernandez and his running mate, former President Cristina Fernandez de Kirchner. Macri is attempting to repair the economy with painful austerity measures, while Fernandez has promised higher wages for workers.

The S&P 500 fell 0.6% at about 10.30 a.m. ET after the index slid 0.7% on Aug. 9. The U.K.'s FTSE 100 lost 0.1% as did France's CAC, while Germany's DAX was little changed. The Stoxx Europe 600 slipped 0.1%.

Government bonds rallied with U.S. 10-year Treasury yields sliding 7 basis points to 1.68% after ending last week little changed. German Bund yields slipped 1 basis point to negative 0.59% and France's 10-year note yield also lost 1 basis point to negative 0.28%. Equivalent-maturity Italian yields fell 9 basis points to 1.71% from last week's five-week high.

The Argentine peso slumped 29% to a record-low 58.49 to the dollar while the country's 100-year bonds were reportedly down more than 25% in New York.

Austrian sensor solutions company AMS AG plunged 11% after it said it was willing to top Bain Capital LP and Carlyle Group LP's bid for OSRAM Licht AG, which climbed 11% after AMS' announcement.

In another brewing trade dispute, South Korea placed Japan under a new export category as tensions between the two Asian neighbors festered.

Shares in Asia were mixed as several markets, including Japan's, were closed for a public holiday.

Hong Kong's Hang Seng fell 0.4% as the Asian financial hub's airport authorities canceled all remaining departure flights due to the ongoing protests. Cathay Pacific Airways Ltd. declined 4.9% after the Hong Kong flag carrier warned its staff against supporting the demonstrations, following Beijing's warning. The Shanghai SE Composite jumped 1.45%.

In currencies, the euro rose 0.1% to $1.1215, while the British pound appreciated 0.3%. The Japanese yen also rose 0.3%.

Brent crude oil gained 0.1% to $58.60 per barrel on the ICE Futures Exchange. The gold spot price rose 0.5% to $1,503.63 per ounce.

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The day ahead:

2 p.m. ET — U.S. Treasury budget (Econoday consensus: $-87.5 billion)

7:50 p.m. ET — Japan producer price index (Econoday consensus: -0.5% month over month, 0.1% year over year)