GLOBAL MARKETS-Asian shares retreat as virus and Sino-U.S. tensions flare

(Adds Chinese stocks, European futures, updates prices)
* Dollar firm and stocks under pressure
* Asia ex-Japan index and Shanghai index down 1%
* European futures down 1.8%; FTSE futures 1.5% lower

By Tom Westbrook and Pete Schroeder
SINGAPORE/WASHINGTON, July 14 (Reuters) - Asian stock
markets slipped on Tuesday, oil sagged and a safety bid
supported the dollar as simmering Sino-U.S. tensions and fresh
coronavirus restrictions in California kept a lid on investor
optimism as earnings season gets underway.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 1.2%. Japan's Nikkei .N225 retreated from
a one-month high touched on Monday, dropping 0.9%, while Chinese
stocks were down despite better-than-expected trade numbers. A
firm dollar put pressure on the Aussie and kiwi. AUD/
The moves came after a selloff on Wall Street that followed
reopening rollbacks in California, where Governor Gavin Newsom
ordered bars closed and restaurants and movie theatres to cease
indoor operations. EUROSTOXX 50 futures STXEc1 were down 1.8% in Asia and the
FTSE futures FFIc1 1.5%, while S&P 500 futures ESc1 were
flat after the index .SPX lost 0.9% on Monday. .N
Meanwhile tension grew between the United States and China.
The United States on Monday rejected China's disputed claims to
offshore resources in most of the South China Sea - a shift in
tone which prompted a rebuke from Beijing. The Trump Administration also plans on scrapping a 2013
auditing agreement that could foreshadow a broader crackdown on
U.S.-listed Chinese firms, as friction between the world's two
largest economies generates heat on a broad front. "It's not just the tempo which is picking up, but the aspect
of so many areas being pulled in to the dispute," said Vishnu
Varathan, head of economics at Mizuho Bank in Singapore.
"Last time it was really about the bottom line," he said,
but now what had been primarily a trade dispute ranges across
political and strategic dimensions, making a resolution less
likely and the next moves less predictable.
China's Shanghai index .SSEC fell 1.13% despite official
figures showing both Chinese exports and imports topped
forecasts in June, while the Asian giant continued to buy
significant amounts of commodities including iron ore.
California's return to restrictions also has markets on edge
about whether the virus can wreak more economic harm, as total
infections surged by a million in five days and now top 13
million. ABOUT 2021
Oil prices, a proxy for global energy consumption and
therefore growth expectations, reflected the growing worries.
U.S crude futures CLc1 fell 2.4% to $39.14 per barrel and
Brent futures LCOc1 fell 2.1% to $41.81 per barrel. O/R
The pullback in risk assets remains modest but has, at least
temporarily, knocked the wind from the frothiest sections of the
markets.
The tech-heavy Nasdaq .IXIC shed 2% on Monday and shares
of Tesla TSLA.O ended down 3%, tapping the brakes on a rally
that has boosted the electric car maker's stock by more than 40%
in two weeks. Along with the virus, there are also signs of an
interruption to the steady flow of better-than-expected economic
data. On Tuesday data showed Singapore entered recession last
month, with the economy contracting 41.2% for the quarter, worse
than the 37.4% analysts had forecast. Currency markets hemmed the dollar in a tight range, with
the kiwi NZD=D3 stalling its grind higher at $0.6535 and the
Aussie AUD=D3 sat at $0.6945. FRX/
The euro EUR=EBS hung on to overnight gains at $1.1343
though awaits German sentiment data at 0900 GMT for the next
read on Europe's recovery.
Focus then shifts to U.S. earnings, with JP Morgan JPM.N ,
Citigroup C.N and Wells Fargo WFC.N as well as Delta Air
Lines DAL.N due to report on Tuesday to a market already
looking ahead to 2021 and beyond.
"It's really about 2021 - 2020 is over," said fund manager
Hugh Dive, chief investment officer at Atlas Funds Management in
Sydney, where earnings season properly begins next month.
"The outlook statements are what the market will look at,"
he said. "If a company surprises on the upside with their 2020
earnings, but has shaky commentary for 2021, well they're not
going to be rewarded for that."
Spot gold XAU= sat below recent peaks at $1.797.30 per
ounce and U.S. Treasuries were firm. The yield on benchmark
10-year U.S. government debt US10YT=RR was $0.6168%.

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