* Euro STOXX 600 .STOXX falls 0.3%
* U.S. 2-year and 10-year Treasury yield gap smallest in 12
years
* Trump delays tariffs on some China imports, boosts
sentiment
* Crude oil prices slip after previous day's big surge
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tom Wilson
LONDON, Aug 14 (Reuters) - European stocks fell on Wednesday
as Germany's economy went into reverse, reviving fears of global
recession and tempering a rally for equities after Washington
delayed tariffs on some Chinese imports.
Europe's biggest economy shrank 0.1% in the second quarter
as the trade war and weak demand dragged on German manufacturers
The euro zone as a whole reported gross domestic
product grew just 0.2% in the same quarter.
The Euro STOXX 600 .STOXX fell 0.4%. Markets in London
.FTSE , Frankfurt .GDAXI and Paris FCHI lost from 0.2% to
0.6%. Wall Street futures gauges were also lower .
Bond markets were also flashing warning signals of
recession. The gap between U.S. two-year and 10-year Treasury
yields - a closely watched metric for signs of a slowdown - fell
to less than a basis point after shrinking on Tuesday to its
narrowest since June 2007.
The German figures, along with data showing the slowest
growth for Chinese industrial output in 17 years stoking
recession worries, knocked the wind out the sails for stocks.
Equity investors on Wall Street and Asia had cheered earlier
when U.S. President Donald Trump pushed back a Sept. 1 deadline
for new tariffs on remaining Chinese imports. The S&P 500 .SPX , which had fallen 1% on Monday, rose 1.5%
overnight, sending Asian stocks outside Japan .MIAPJ0000PUS up
0.6%. Benchmarks in Shanghai, Hong Kong and Tokyo all mirrored
the surge in U.S. stocks.
But the momentum ebbed in Europe, as optimism faded that
Trump's move meant tensions were easing and Germany's slowdown
showed the damage already done by the trade war.
"The trade war and the dispute between U.S. and China has
already had an impact - especially when you look at countries
most sensitive to global trade like Germany and even Italy,"
said Christophe Barraud, chief economist and strategist at
Market Securities in Paris.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 47 countries, was flat.
In another sign the trade dispute is dragging on economic
growth, China's industrial output slowed more than expected in
July. Its 4.8% growth was the lowest in 17 years. The Japanese yen JPY=EBS , considered a safe haven, gained
0.3% to 106.42 per dollar as the Chinese data signalled that any
resolution to the trade war was a long way off.
Mirroring that view, the offshore Chinese yuan CNH=EBS
fell 0.4% against the dollar to 7.0337, erasing gains made the
day before and remaining weaker than the 7 to the dollar it
reached last week.
In commodity markets, oil prices fell after the Chinese data
from China and a rise in U.S. crude inventories, erasing some of
the gains made after Trump's tariff delay.
Brent crude LCOc1 was down 54 cents, or 0.9%, at $60.76 a
barrel at 0744 GMT, after rising 4.7% on Tuesday, its biggest
percentage gain since December.
For Reuters Live Markets blog on European and UK stock
markets, please click on: LIVE/
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Yuan ticks lower https://tmsnrt.rs/2YNVA6s
Bonds https://tmsnrt.rs/2YN5XYj
China industrial output https://tmsnrt.rs/2YOpAiC
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