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World shares fell for a fifth straight day on Thursday as investors braced for another escalation in a trade war between the United States and China, while emerging-market currencies paused near 15-month lows.

The MSCI All-Country World Index, which tracks shares in 47 countries, was down 0.2 per cent. Stocks in Europe opened lower, with the pan-European STOXX 600 index as much as 0.4 per cent down.

The main worry for investors was the end of a public consultation period on Thursday for U.S. President Donald Trump’s plan to impose tariffs on an additional $200 billion of Chinese goods.

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Trump said on Wednesday trade talks with China would continue but the United States was not yet ready to come to an agreement.

“Unlike the last few days, where there has at least been a wave of PMI (purchasing manager indexes) to deal with, Thursday has little in the way of distraction for the European markets, meaning investors are just going to have to sit and stew in this particularly unpleasant trading broth,” said Connor Campbell, an analyst at Spreadex.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped more than 1 per cent to a one-year trough of 515.24 points. It was last down 0.8 per cent.

Japan’s Nikkei slipped 0.4 per cent and Australian shares dropped 1.1 per cent. China’s blue-chip index fell 1.1 per cent, Hong Kong’s Hang Seng index 1 per cent.

Further weighing on sentiment, data out earlier showed German industrial orders fell unexpectedly in July, another sign that factories in Europe’s largest economy are feeling the bite of protectionist trade politics.

Investors are also watching for developments as the United States and Canada resume talks about revamping the North American Free Trade Agreement. Canada insisted there was room to salvage the pact despite few signs a deal was imminent .

The dollar, considered a safe haven at times of turmoil because of its status as the world’s reserve currency, has generally benefited from the trade conflicts. It has gained 8 per cent since the end of March, with currencies in emerging markets taking a hammering.

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But measured against a basket of currencies, the dollar retreated from the two-week highs it reached earlier this week to stand 0.1 per cent lower at 95.07.

The euro was a tad stronger at $1.1636.

Sterling held on to gains made on Wednesday as investors positioned for a favourable Brexit outcome. It was last up 0.1 per cent at $1.2910.

Emerging markets have been hit by the financial crises in Argentina and Turkey. In Indonesia’s central bank has had to intervene several times in recent weeks to stem the rupiah’s slide.

Indonesia’s benchmark stock index was last up nearly 1 per cent while the rupiah also gained a tad.

MSCI’s index of emerging market currencies, which had earlier paused near 15-month lows, was up 0.1 per cent on the day after two straight days of heavy declines.

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But analysts warned about further losses because investors were no longer looking at Argentina, Turkey and South Africa as isolated cases. They were fretting over the impact of rising U.S. inflation and interest rates on heavily indebted economies.

“As global monetary conditions slowly tighten, the global economic cycle rolls over and the U.S. President disturbs the global trade cycle, there’s definitely more to the EM sell-off than a few unrelated spots of weakness,” wrote strategists at Societe Generale in a note to clients.

The emerging market equity index has been crunched in the past month or so, falling for six consecutive sessions and down more than 3 per cent this week.

A range of factors have hit the stocks: policy tightening by the U.S. Federal Reserve, the crises in Turkey and Argentina, the Sino-U.S. trade war and broader concerns about China’s economy.

“We doubt that the main factors which have caused equities across much of the emerging world to weaken together recently will go away just yet,” Capital Economics said in a note.

In commodities, oil prices fell as emerging market woes weighed on sentiment. U.S. crude eased 0.1 per cent to $68.65 a barrel. Brent was last down 0.1 per cent at $68.64.

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Gold was stronger with spot gold up half a per cent at $1,202.15 an ounce.

Reuters

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