By Ben St. Clair 

Global stocks declined Thursday amid renewed concerns over trade frictions after President Donald Trump reiterated his tariff threat regarding European autos.

The Stoxx Europe 600 was down 0.2%, with basic resources and chemicals companies among the decliners. In Asia, the Shanghai Composite dropped 0.5%, Hong Kong's Hang Seng was down 0.4% and Japan's Nikkei fell 0.1%.

The Chinese yuan declined to lows not seen since last July, as the People's Bank of China on Thursday set the dollar's daily reference rate at 6.7066 yuan, weakening the yuan by 0.2%.

The gap between the yuan's onshore and offshore rates has widened, suggesting overseas institutions are more bearish than peers within mainland China. The currency has been hit by the U.S.-China trade conflict and expectations that Beijing will ease monetary policy as the Federal Reserve continues to raise rates.

Shares in auto companies fell 0.6% in morning trading in Europe, a day after Mr. Trump's tariff comments. His remarks came despite a letter Wednesday from a coalition of foreign and domestic auto companies, auto dealers and auto-parts makers urging Mr. Trump not impose levies.

Mr. Trump said that a failure to negotiate "something fair" with European and North American allies could lead to "tremendous retribution, " referring specifically to autos.

The U.S. imported over $350 billion in cars, trucks and auto components in 2017, according to Commerce Department data. With the Trump administration threatening tariffs of between 20% and 25%, the measures, if enacted, would be the administration's largest to date. The issue is expected to be high on the agenda next week when European Commission President Jean-Claude Juncker visits the White House.

On Wednesday, Fed Chairman Jerome Powell wrapped up two days of testimony on Capitol Hill. Mr. Powell expressed optimism on the U.S. economy and affirmed the Fed's plans to raise interest rates gradually "for now."

The U.S. dollar continued to gain strength, with the WSJ Dollar Index, which measures the currency against a basket of 16 others, up 0.4%. Yields on 10-year U.S. Treasurys were at 2.885%, up from 2.875% Wednesday. Yields rise as prices fall.

The British pound was down 0.5% to $1.300 after sinking to nine-months lows Wednesday in late afternoon trading in New York. Lower-than-expected U.K. inflation data drove the pound lower Wednesday and cast a degree of doubt on whether the Bank of England will raise rates next month.

In commodities, Brent crude fell 0.8% to $72.29 a barrel. Gold fell 0.8% to $1,218.30 an ounce.

Saumya Vaishampayan, Chester Dawson and Joshua Zumbrun contributed to this article.

(END) Dow Jones Newswires

July 19, 2018 05:34 ET (09:34 GMT)

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