The Japan Times - Stocks slide even as fears over banks, trade war ease

US President Donald Trump said in an interview with Fox Business that he will hold talks with China's Xi Jinping during the upcoming APEC summit in South Korea, a week after he threatened to call off the meeting.

Last week Trump threated to cancel the meeting and impose 100-percent tariffs on China over its rare-earth export controls, sending markets tumbling on the prospect of the trade war between the world's top two economies flaring again.

Analysts, however, said Trump eased some of those concerns by saying it the interview that the higher tariffs were "not sustainable".

"It was all set to be another frantic Friday for markets as a US regional bank crisis appeared on the horizon, but comments from President Trump have once again lifted equities off their lows," said Chris Beauchamp, Chief Market Analyst at trading platform IG.

Sentiment had soured Thursday after two regional US banks disclosed issues with loans, sparking a sell-off in banking stocks.

"As well as ongoing trade war uncertainty between the US and China, sluggish global growth and stretched valuations, credit risk in US regional banks has added to the list of growing worries," said Fawad Razaqzada, market analyst at City Index and Forex.com.

But Wall Street's main indices were unable to hold onto early gains despite shares in regional banks recovering somewhat following the sell-off.

Investors have been nervously watching the US banking sector since parts company First Brands and subprime lender Tricolor filed for bankruptcy in September, with the former owing billions to lenders.

Those fears deepened this week after Zions Bancorp disclosed a $50-million charge tied to commercial loans from its California arm, while Western Alliance said a borrower failed to deliver the promised collateral.

Zions Bancorp shares were up 3.4 percent on Friday after having plunged 13.1 percent the previous day, while those of other regional banks also recovered some of their losses.

"It's also worth considering that the banking sell-off may be overdone," said David Morrison, analyst at investment platform Trade Nation.

"Then again, a few analysts have been warning about a lack of transparency across private credit and private equity for a while now. So, there’s certainly a risk of more bad news to come," he added.

Europe's main indices fell, with bank shares taking a hit.

Deutsche Bank shares slumped six percent, while French bank Societe Generale shed nearly five percent and Britain's Barclays dropped 5.7 percent.

Hong Kong and Shanghai dropped more than two percent, and Tokyo also closed lower.

The bank worries sent safe-haven gold to another record, of $4,379.93 an ounce, and led investors to pile into government bonds.

Adding to unease, lawmakers in Washington are still no closer to ending a government shutdown that has delayed the release of key economic data used by the Federal Reserve to decide on policy.

Still, expectations the Fed will cut interest rates at least once more this year has given traders some support.

The Argentine peso depreciated against the dollar Friday as legislative elections approach later this month, despite the US on Wednesday doubling its support for the currency to $40 billion.

- Key figures at around 1530 GMT -

New York - Dow: UP less than 0.1 percent at 45,990.44 points

New York - S&P 500: DOWN 0.2 percent at 6,615.90

New York - Nasdaq Composite: DOWN 0.5 percent at 22,446.20

London - FTSE 100: DOWN 0.9 percent at 9,354.57 (close)

Paris - CAC 40: DOWN 0.2 percent at 8,174.20 (close)

Frankfurt - DAX: DOWN 1.8 percent at 23,830.99 (close)

Tokyo - Nikkei 225: DOWN 1.4 percent at 47,582.15 (close)

Hong Kong - Hang Seng Index: DOWN 2.5 percent at 25,247.10 (close)

Shanghai - Composite: DOWN 2.0 percent at 3,839.76 (close)

Euro/dollar: DOWN at $1.1663 from $1.1692 on Thursday

Pound/dollar: DOWN at $1.3399 from $1.3436

Dollar/yen: DOWN at 150.30 yen from 150.35 yen

Euro/pound: UP at 87.04 percent from 87.02 pence

West Texas Intermediate: DOWN 0.1 percent at $56.91 per barrel

Brent North Sea Crude: DOWN 0.1 percent at $60.99 per barrel

burs-rl/rmb

T.Maeda--JT