By Georgi Kantchev

Global stocks fell at the start of the week, as escalating trade tensions between the U.S. and China weighed on investors' risk appetite.

The Stoxx Europe 600 was down 0.8% in early European trade, pulled lower by stocks in Germany and France. That followed a downbeat session in Asia.

Futures pointed to opening losses of 0.5% for the S&P 500 and 0.6% for the Dow Jones Industrial Average.

President Donald Trump approved tariffs of 25% on about $50 billion of Chinese goods on Friday, prompting Chinese officials to hit back by announcing the country would levy penalties of the same rate on U.S. goods of the same value.

The moves exacerbate concerns among investors that the world's two biggest economies could descend into a trade war. Rising frictions in international trade in recent months have already instilled uncertainty in global markets, which are experiencing one of their most volatile stretches in years.

Concerns about the fate of the North American Free Trade Agreement and tariffs that the Trump administration imposed on European allies are also adding to investor anxiety.

"Trade continues to weigh on the market and the China tariffs are a big deal," said Lindsey Bell, investment strategist at CFRA Research. "It could get worse before it gets better."

Market watchers still expect the U.S. and China to continue talking, and so far the repercussions for global growth are seen as limited. Analysts at Deutsche Bank estimate the impact of the announced U.S. tariffs on China's economy would be less than 0.1% of China's gross domestic product this year.

However, if the U.S. imposes further tariffs as Mr. Trump has already threatened, the impact would rise to 0.3%, according to the bank.

The 10-year U.S. Treasury yield fell to 2.915% from 2.926%. Yields move inversely to prices. The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was broadly flat.

Investors this week are also looking to central bankers for further guidance on monetary policy after the Federal Reserve and the European Central Bank both held meetings last week.

The ECB, which signaled that interest rates would likely remain unchanged at least through the summer of 2019, is holding an event in Sintra, Portugal. The Bank of England is meeting on Thursday.

In Asia, Japan's Nikkei Stock Average finished down 0.8% while South Korea's Kospi shed 1.2%. Bourses in China and Hong Kong were closed for holidays.

In commodities, Brent crude, the global oil price benchmark, was up 0.9% as investors awaited a key producer meeting between the Organization of the Petroleum Exporting Countries and other major suppliers later this week. Gold was up 0.4%.

Write to Georgi Kantchev at georgi.kantchev@wsj.com

(END) Dow Jones Newswires

June 18, 2018 08:27 ET (12:27 GMT)

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