* European stocks deep in red on trade deal worries
* U.S. stock futures fall 0.2%, Asia shares down
* Trump seen signing HK bills, looks set to anger Beijing
* Trade deal seen delayed into next year - sources
* U.S. bond yield, yuan at 3-week low
By Thyagaraju Adinarayan
LONDON, Nov 21 (Reuters) - Global stocks slid further on
Thursday as the standoff between the world's two largest
economies extended beyond trade, reducing the odds of a
"phase-one" deal this year and forcing investors to seek shelter
in safe-haven assets.
The U.S. House of Representatives on Wednesday passed two
bills intended to support protesters in Hong Kong and send a
warning to China about human rights. With U.S. President Donald Trump seen likely to sign the
bill, Deutsche Bank strategist Jim Reid said this "could risk
progress towards a phase one trade deal".
European shares extended their losses from Wednesday with
the pan-European STOXX 600 .STOXX and the trade-sensitive
Germany's DAX 30 .GDAXI both sliding 0.7% to fresh two-week
lows.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 1.1% to a near three-week lows, with Hong
Kong's Hang Seng .HSI tumbling 1.6% while Japan's Nikkei
.N225 dropped 0.5%. Chinese mainland shares dropped 0.3%
.SSEC .
U.S. S&P500 futures ESc1 were down 0.2%, having dropped as
much as 0.6% in Asian trade, a day after all three major indexes
fell, with the S&P 500 .SPX losing 0.4%.
"The cracks in equity market sentiment widened a little
further yesterday, although this setback remains modest in the
context of the index gains enjoyed so far in Q4," Ian Williams,
economics & strategy research analyst at Peel Hunt, said.
The S&P 500 .SPX had hit a record high as recently as
Tuesday on trade deal hopes, but Washington's move on Hong Kong
derailed the rally.
Trade experts and people close to the White House said
completion of a "phase one" U.S.-China trade deal could slide
into next year, as Beijing presses for more extensive tariff
rollbacks, and the Trump administration counters with demands of
its own. Chinese Vice Premier Liu He, also the chief trade
negotiator, said he was "cautiously optimistic" on a phase one
deal, according to a report by Bloomberg.
CAUTIOUS
As the chances of a deal in the near-term faded, investors
sought the safety of government bonds, the yen and gold.
Spot gold XAU= climbed 0.2% to $1,473.56 per ounce as of
0852 GMT.
German government bond yields DE10YT=RR -- which move
inversely to price -- steadied a day after hitting more than two
week lows. The 10-year U.S. Treasuries yield dipped to 1.733%
US10YT=RR , near its lowest levels in three weeks.
On the other hand, the Chinese yuan hit three-week lows,
trading as low as 7.0450 to the dollar CNY=CFXS in onshore
trade.
The dollar was soft against the yen at 108.59 JPY= ,
compared to this week's high of 109.07 touched on Monday.
Japan's currency has rallied almost 1% from more than five-month
lows hit against the greenback earlier this month. "Our short-term strategy remains fairly cautious, as markets
are very narrowly driven – every positive piece of news in trade
negotiations sends markets higher, while any disappointment –
sinks," Marija Veitmane, Senior Strategist at State Street
Global Markets said.
"This makes it very hard for investors to build positions in
risk trades."
The euro gained slightly and was last trading at $1.1077
EUR= ahead of the release of the latest European Central
Bank's policy meeting minutes.
Meanwhile, oil prices dipped, paring some of their 2% gains
made on Wednesday after a better-than-expected U.S. crude
inventories report and as Russia said it would continue its
cooperation with OPEC to keep the market balanced.
Global benchmark Brent futures LCOc1 dropped 0.5% to
$62.08. U.S. West Texas Intermediate (WTI) crude futures CLc1
were down 0.5% at $56.73 per barrel in early Thursday trade.