Hong Kong tensions unnerve world stock markets, oil tumbles

NEW YORK/LONDON (Reuters) – Global equity markets edged lower on Friday as Beijing moved to impose a new security law on Hong Kong after last year’s pro-democracy unrest, further straining U.S.-China ties that cast a pall over recovery prospects and sent oil prices tumbling.

FILE PHOTO: A man wearing a protective face mask walks past the London Stock Exchange Group building in the City of London financial district, London, Britain, March 9, 2020. REUTERS/Toby Melville

News that China also dropped its annual economic growth target for the first time added to concern about the fallout from the COVID-19 pandemic, boosting safe-havens such as U.S. Treasuries US10YT=RR and the dollar.

China said it would impose new national security legislation on Hong Kong, leading U.S. President Donald Trump to warn that Washington would react “very strongly” against an attempt to gain more control over the former British colony.

Emerging market shares were hit hard by the latest salvo, falling -2.65%. But stocks in Europe and on Wall Street slid only a bit, also weighed down by investors eyeing a long weekend in the United States, the UK and elsewhere.

Tensions between the world’s two largest economies have risen in recent weeks, with Washington ramping up criticism of China over the origins of the pandemic.

“You have these doubts over China that is triggering this sell-off in oil, and it’s going to gain steam. If oil sells off, it’s hard to have a strong stock market,” said Ed Moya, senior market analyst at OANDA in New York.

Crude oil has rebounded the most of

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