By Riva Gold 
   -- Energy sector under pressure 
 
   -- Bonds, yen gain 
 
   -- World stocks turn lower 

Global stocks fell Wednesday while government bond prices and the yen rose as investors continued to assess trade tensions and a drop in commodity prices.

The Stoxx Europe 600 was down 1% midday, following a steeper drop across Asian markets. Futures pointed to a 0.7% opening loss the S&P 500 after it turned lower in late trading on Tuesday.

Oil-and-gas companies led declines in Europe and Asia as Brent crude oil fell 0.9% to $78.86 a barrel amid reports that OPEC may ease supply curbs next month.

Analysts and investors also said they were closely watching developments on global trade, pointing to uncertainty over an agreement with China over telecom giant ZTE.

The Senate Banking Committee approved legislation Tuesday to tighten national-security reviews of Chinese technology giants, strengthen export controls and prohibit the Trump administration from lifting stiff penalties imposed on ZTE.

Industrial stocks, which rallied Monday on news the U.S. would suspend efforts to apply tariffs in $150 billion in Chinese imports, helped lead the declines in the U.S. late Tuesday.

"[Trade] risk is going to be more impactful to the market than others because this does directly impact the economy," said Katie Nixon, chief investment officer at Northern Trust Wealth Management. "You'll continue to see market moves ebb and flow with trade news, whether it's the U.S. and Europe over steel and aluminum tariffs or with China."

Investors parsed reports that President Donald Trump is weighing measures to cut European Union steel and aluminum exports to the U.S. by about 10%.

Europe's basic resources sector fell 2.3% on Wednesday, among the worst performers. Shares of steelmaker ArcelorMittal fell 4% while steel-pipe product manufacturer Tenaris and stainless steel manufacturer Outokumpu Oyj were down roughly 3%. The broader mining sector was under pressure amid speculation China may aim to lower coal prices.

Europe's auto sector, often seen as a potential target in trade spats, fell 1.7%. "The question is whether Europe becomes the next trade target for Trump," said Andrea Cicione, head of macro strategy at TS Lombard.

Italian stocks also remained under pressure amid concerns the prospective antiestablishment government there will stake out anti-euro positions and start a spending-binge. Italy's FTSE MIB Index fell 1.5%, bringing its losses this month to 4.6%, while Italian 10-year government bond yields climbed to 2.430%, sending its spread over German debt to 1.9 percentage points.

"If Italy went down the path of putting in place all these measures [in a leaked draft agreement] there would be a massive budget deficit," said Mr. Cicione. "But a coalition like this one, with a thin majority... is not going to implement anything like the measures they put forward."

As investors broadly shed risky assets, yields on 10-year Treasurys fell to 3.013% from 3.065% late Tuesday, signaling a rise in prices, while the dollar fell 1% against the Japanese yen, which tends to gain in times of market stress.

The euro was down 0.4% at $1.1732 as data confirmed business activity in the eurozone slowed more than expected in May, suggesting growth hasn't rebounded from the first quarter.

The Turkish lira continued to hit record lows and was last down 3.5% against the dollar.

Earlier, stocks in Asia mostly fell, echoing losses in the U.S. as investors considered developments on trade and news that President Trump said he would scotch a planned summit with Kim Jong Un unless the North Korean leader first agreed to a list of unspecified conditions.

Japan's Nikkei Stock Average shed 1.2% amid a steep climb in the yen while Hong Kong's Hang Seng fell 1.8% and Shanghai stocks fell 1.4%.

Shares of Chinese auto makers were under pressure following news that China will reduce its import tariff on autos starting July in a concession to U.S. trade complaints.

Joanne Chiu contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

May 23, 2018 07:05 ET (11:05 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.