European markets decline as US and China clash over Hong Kong

European markets are set to open lower on Thursday, as investors monitored friction between the U.S. and China over the Hong Kong protests.

The U.K.’s FTSE 100 is seen down 10 points at 7,405, Germany’s DAX down 22 points at 13,259 and France’s CAC off by 9 points at 5,914, according to IG index data.

U.S. President Donald Trump signed into law two bills backing protesters in Hong Kong on Wednesday, setting off a clash with China which had objected to such legislation. China’s Ministry of Foreign Affairs subsequently slammed the move, accusing the U.S. of having “sinister intentions.”

The episode could dash hopes of Washington and Beijing reaching a so-called “phase one” trade deal, which markets had moved higher on earlier in the week.

In Asia, equities wobbled as investors fretted over the potential deterioration in U.S.-China relations. MSCI’s broadest index of Asia-Pacific shares excluding Japan sank about 0.1%.

Back in Europe, traders digested polling data out of the U.K. ahead of a crucial Dec. 12 election. A YouGov poll showed Prime Minister Boris Johnson on course to win a solid majority of 68 seats in Parliament.

In terms of data, investors will likely be on the lookout for euro zone economic sentiment figures due Thursday morning. German inflation data is also expected in the afternoon.

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