* Trump offers no new details on U.S.-China trade pact
* Trade war has taken toll on major economies
* European auto, bank shares tumble
(Updates throughout)
By Sujata Rao
LONDON, Nov 13 (Reuters) - European shares fell on Wednesday
from four-year highs after U.S. President Donald Trump
threatened to "substantially" increase tariffs if China failed
to agree a trade deal, and he also took a swipe at European
Union trade policies.
Wall Street was set to open weaker as well, equity futures
showed, with the S&P 500 index indicated 0.4% lower ESC1 .
The other issue weighing on sentiment is the intensifying
unrest in Hong Kong which many fear will lead to a Chinese
crackdown. That pushed Hong Kong shares 2% lower .HSI and
weighed on markets across Asia.
MSCI's index of world shares slipped 0.3% .MIWD00000PUS ,
following a 1% fall in Asian shares outside Japan. Japan's
Nikkei slipped almost 1%, moving further off last week's
13-month highs .N225 .
"The market was anticipating something more positive from
Trump, but he didn't deliver," said Justin Onuekwusi, a
portfolio manager at Legal & General Investment Management.
"In recent weeks, we saw the balance of probabilities shift
to the positive side, risks being taken off the table, but
people have realised that risk is still there," Onuekwusi said.
He's been reducing his equity allocations, he said.
Trump's speech threatened to raise tariffs on China, but he
also said a trade deal was "close", without offering details on
when or where it would be signed. He also criticised EU trade
policies before a Nov. 14 deadline to decide whether to raise
tariffs on European and Japanese carmakers.
That deadline will probably be extended, but investors
remain jittery. A pan-European equity index .STOXX fell 0.6,
coming off Tuesday's four-year highs, when optimism before
Trump's speech and better-than-expected economic indicators from
Germany boosted stocks.
An index of European auto companies .SXAP slipped 2%. Bank
shares lost 2.7% .SX7P .
Brent crude oil futures fell more than 1% LCOc1 as the
diminishing prospects for a resolution to the 16-month long
trade war suggested less future demand for energy.
Expectations for phase one of a trade deal this month have
supported stocks and riskier assets recently. Investors were led
to cut the share of cash in their portfolios to
six-and-a-half-year lows, according to Bank of America Merrill
Lynch's monthly survey of global managers.
The poll also showed growth optimism at 18-month highs.
However, lack of progress on an agreement has started to
increase doubts about whether a trade truce will happen at all.
"I'm absolutely concerned. The clock is ticking," said
Michael McCarthy, chief market strategist at CMC Markets in
Sydney. "Markets are now expecting substantial progress in the
next week or so, and if not, then confidence could crumble."
Equity futures suggest a weak session for U.S. stocks, where
the S&P 500 backed off record highs after Trump spoke. Nasdaq
and Dow Jones futures were also down 0.5% NQc1 YMc1
The S&P 500 has risen 2% this month and 23% so far in 2019
thanks to interest rate cuts, trade hopes and robust corporate
earnings -- profits at three-quarters of S&P 500 companies have
topped expectations this quarter, according to Refinitiv.
But a more prolonged standoff will revive fears for the
world economy. Oxford Economics estimates the trade war has
trimmed eight-tenths of a percentage point off U.S. growth.
Having started 2019 with 3.1% growth, the economy eased to 1.9%
in the third quarter, they noted.
Asian markets were also rattled by Trump's speech and Hong
Kong's turmoil. Onshore spot yuan CNY=CFXS fell to a low of
7.0270 per dollar at one point, the weakest since Nov. 5.
Hong Kong protesters planned to paralyse parts of the city
for a third day, with transport, schools and many businesses
closing after violence escalated across the city. Hong Kong interbank rates rose, with one-month HIBOR at its
highest since Aug. 6 HIHKD1MD= .
The standout currency performer was the New Zealand dollar
NZD=D3 m which jumped 1% after the central bank unexpectedly
left interest rates unchanged at 1%. The U.S. dollar gained 0.05% against a currency basket, just
off three-week highs .DXY . The damage to risk appetite pushed
down yields on U.S. and German safe-haven debt. Yields on
10-year Treasury notes US10YT=RR fell to a six-day low around
1.87%; 10-year Bund yields were down 4 basis points to minus
0.28% DE10YT=RR .
Markets now await data that is expected to show U.S.
inflation rose in October. Federal Reserve Chairman Jerome
Powell will also testify to a Congressional committee.
Hong Kong stocks have suffered during protests https://tmsnrt.rs/2MJbLuj
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(Editing by Larry King)