A global markets rally faltered Wednesday as the ongoing US-China trade row eroded investor sentiment, dealers said.

Wall Street stocks retreated at the opening bell, with the Dow slipping less than a tenth of a per cent.

In Europe, Frankfurt and Paris stocks drifted downwards but London’s benchmark FTSE 100 index carved out a gain of 0.7 per cent on the back of the struggling Brexit-hit pound.

“While the rest of Europe wilted in the face of the USA’s latest tariffs on Chinese goods, the FTSE benefited from the continuation of sterling’s awful August,” said Spreadex analyst Connor Campbell.

The pound sank this week on growing concern of a chaotic no-deal exit for Britain from the European Union in March 2019.

The weak currency however lifts shares in multinationals that derive the lion’s share of their earnings in dollars.

On the trade war front, the US government announced Tuesday that the first round of President Donald Trump’s punitive tariffs on China will hit the full $50 billion in goods starting August 23.

That is on top of the measures Washington had already imposed on $34 billion of imports last month.

The move had been widely expected. But with China putting retaliatory measures in place, it reinforced fears the two sides are heading for an all-out trade war that could hammer the global economy.

“Fears of a full-blown trade war between the world’s two biggest economies are set to intensify after the Trump administration announced another round of tariffs on Chinese products,” noted FXTM analyst Lukman Otunuga.

The White House has also lined up another $200 billion in Chinese imports to target in future.

Asia equities stuttered Wednesday, with Tokyo down 0.1 per cent, Shanghai shedding 1.3 per cent, but Hong Kong ended up 0.4 per cent in value.

Global stock prices had risen Tuesday on the back of solid second-quarter US corporate earnings which temporarily took investor attention off festering trade wars, dealers said.

Wall Street had provided a strong lead for Asian markets with the Nasdaq approaching a record high, while energy firms rallied on higher oil prices.

However, markets ran out of steam on Wednesday despite forecast-beating Chinese trade figures.

China released figures showing its trade surplus with the US dipped only slightly in July. Globally its exports rose a better-than-forecast 12.2 per cent and imports surged 27.3 per cent, also beating expectations.

The yuan got some support after a Bloomberg News report said the Chinese central bank had emphasised the need for currency stability to the country’s lenders as it looks to halt a slide in recent months.

It said officials called on them to prevent “herd behaviour” and momentum-chasing moves in the forex markets, fearing a run on the yuan similar to 2015-16. This hammered the unit and sent global markets into a tailspin.

Oil rose earlier this week after Washington re-imposed a first round of sanctions on Tehran after leaving the nuclear deal, with an embargo on the country’s crude exports in November. However it recoiled on the resurgence of trade war fears.