Asia stocks falter as China knocked by renewed trade war fears

China’s benchmark stock index skidded to four-year lows and dragged Asian equities down on Thursday, as renewed fears of a broadening economic impact from an escalating Sino-U.S. trade conflict sapped confidence. The dollar, however, was in fine fettle, hitting a one-week high after the minutes of the Federal Reserve’s latest meeting backed market expectations for borrowing costs to rise further. While the Fed’s policy outlook suggested the U.S. economy was humming along nicely, the specter of rising dollar yields, which along with trade tensions were at the center of last week’s global equities rout, dented appetite for risk.

China’s stock markets were hit hard, with the nation’s premier warning that the economy faces increasing downward pressure. MSCI broadest index of Asia-Pacific shares outside Japan fell 0.5 percent. China’s benchmark Shanghai Composite Index shed as much as 2.2 percent to hit its lowest level in four years, while the blue-chip CSI 300 index dropped as much as 1.8 percent, not far from its more than two-year low marked previous day. Analysts at Pingan Securities said in a note that lending data released on Wednesday failed to reassure investors looking for more government support amid signs of slowing growth.

The U.S. dollar index and Treasury yields rose to its highest levels in a week on Wednesday. The dollar index, which measures its value against six major peers, last traded at 95.703, little changed on the day, after rising to a fresh one week-high earlier in the day. 10 year Treasury yield last stood at 3.210 percent, 2.8 basis points higher than the U.S. close. The euro changed hands at $1.1496, holding steady versus the greenback, after losing 0.65 percent on Wednesday. The euro has lost just under 3 percent of its value versus the dollar over the last three weeks.