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European markets back in red as China shows signs of hurting under trade war

European stocks have fallen after opening higher this morning, as weaker-than-expected Chinese economic data hinted at the effects of the US-China trade war.

Read more: China retaliates with tariffs on $60bn of US goods

Official figures today showed China’s industrial output growth slowing to 5.4 per cent year-on-year in April, a worse-than-predicted figure and much lower than the 8.5 per cent growth seen in March.

Chinese consumers, recently touted as an engine of stability for the country, slowed their spending, causing clothing sales to fall for the first time since 2009.

Germany’s benchmark Dax index rose shortly after the bell, but had fallen 0.5 per cent shortly before 1pm UK time as it digested the Chinese data.

The pan-European Stoxx 600 index also opened higher, but has since fallen 0.3 per cent today. France’s CAC 40 fell 0.4 per cent while Britain’s FTSE 100 dropped 0.1 per cent.

European stocks diverged from those in Asia which rose overnight on the back of US President Donald Trump’s suggestion that a trade deal could be reached.

Trump tweeted yesterday: “When the time is right we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense.”

He had earlier tweeted: “We can make a deal with China tomorrow, before their companies start leaving so as not to lose USA business, but the last time we were close they wanted to renegotiate the deal. No way!”

China’s benchmark Shanghai composite index rose 1.9 per cent overnight, while Hong Kong’s Hang Seng climbed 0.5 per cent.

Asian stocks were following the rise of their US counterparts. The Dow Jones industrial average climbed 0.8 per cent yesterday, while the S&P 500 also rise 0.8 per cent.

Today’s Chinese economic data has helped renew investors’ jitters, however, sending them running for cover towards safe-haven assets.

Read more: Economists pour cold water on Trump's tariff arguments

The German 10-year bund fell to minus 0.0094 per cent today, a new two-and-a-half year low, while 10-year US Treasuries also fell 2.4 per cent.