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Weak economic data in the United States and Europe weighed on global stock benchmarks on Tuesday, sending investors into safe-haven assets.

European stocks fizzled after euro zone manufacturing data showed the sharpest contraction in almost seven years. U.S. stocks and the dollar dropped sharply on data showing manufacturing contracted to a 10-year low in September, adding to fears of a slowdown in the world’s largest economy as a result of the trade war with China .

“The PMIs across the globe have continued to deteriorate and obviously we are in line with that deterioration. It’s all due to the trade war,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

On Wall Street, the Dow Jones Industrial Average fell 343.93 points, or 1.28 per cent, to 26,572.9, the S&P 500 lost 36.56 points, or 1.23 per cent, to 2,940.18 and the Nasdaq Composite dropped 90.65 points, or 1.13 per cent, to 7,908.69

Canadian stocks reversed course to move lower on Tuesday as weak factory readings out of the United States rekindled fears of a global slowdown.

After opening up 0.2 per cent, the Toronto Stock Exchange’s S&P/TSX composite index closed down 210.97 points, or 1.27 per cent, at 16,447.66.

Canadian data was mixed, with a reading on growth showing that the economy was unexpectedly unchanged in July, while manufacturing activity expanded in September at the fastest pace in seven months.

The underwhelming set of data hit heavyweight energy stocks. The sector closed down 3.2 per cent.

Marijuana producers led a 5.4-per-cent drop in the health care sector, while industrials fell by 2.1 per cent.

Leading the index were Semafo Inc., up 4.0 per cent, Yamana Gold Inc., up 2.9 per cent, and Detour Gold Corp., higher by 2.8 per cent.

Lagging shares were Bombardier Inc., down 10.6 per cent, Bausch Health Companies Inc., down 10.0 per cent, and Hudbay Minerals Inc., lower by 8.8 per cent.

MSCI’s gauge of stocks across the globe shed 0.83 per cent.

A slowdown in U.S. economic growth at a time when Europe is seen as close to falling into a recession would remove one of the few bright spots among global markets.

“If we look at some of the data out of either Asia Pacific or the European zone, the U.S. economic data has certainly been the stand-out across the board,” said Art Hogan, chief market strategist at National Securities in New York.

U.S. stocks initially gained after White House trade adviser Peter Navarro dismissed reports on Monday that President Donald Trump’s administration was considering delisting Chinese companies from U.S. stock exchanges as “fake news.”

China and the United States are to resume trade talks next week in Washington.

“Whether it was a ‘fake news’ or not, it is becoming harder to know exactly what the U.S. administration will be doing,” said Takashi Hiroki, chief strategist at Monex Securities.

Concerns over the economy helped send investors into the perceived safety of bonds. Benchmark 10-year notes last rose 10/32 in price to yield 1.6404 per cent, from 1.673 per cent late on Monday.

British government bonds had sold off as Prime Minister Boris Johnson pitched new proposals for an amended Brexit agreement that would remove the contested insurance policy for the Irish border.

“We had reached extreme lows (for bond yields) in August, but now the central banks have delivered the easing markets were expecting, I think we needed this correction,” said Pooja Kumra, a European rates strategist at TD Securities.

The World Trade Organization cut its forecast for growth in global trade this year by more than half on Tuesday and said further rounds of tariffs and retaliation, a slowing economy and a disorderly Brexit could squeeze it even more.

Oil prices slipped after the weak U.S. data was released, with U.S. crude down 0.5 per cent to $58.90 a barrel and Brent down 0.9 per cent to $53.56.

Reuters

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