Stocks drop after Trump says he's ready to step up trade war

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World stock markets fell sharply Friday after U.S. President Donald Trump said he was prepared to put new tariffs on all Chinese imports, escalating the rhetoric in a trade war that could hit global economic growth.

KEEPING SCORE: From being up slightly earlier in the day, European indexes were trading lower. Germany's DAX fell 0.5 percent to 12,622 while France's CAC 40 dropped 0.7 percent at 5,377. Britain's FTSE 100 fell 0.3 percent to 7,661. U.S. indexes were poised to open lower, with S&P 500 futures down 0.2 percent and Dow futures 0.4 percent lower.

TRUMP TALK: Trump told the TV channel CNBC he was ready to exchange tariffs with China until all of China's exports to the U.S. — worth over $500 billion a year — are hit. "I'm ready to go to 500," he said. Asked if he would do it even at a cost of a stock market drop, he said: "If it does it does."

The comments come as the U.S. government is also considering taxing auto imports. Critics lined up this week to urge the administration to reject the tariffs, arguing they would raise car prices, squeeze automakers by increasing the cost of imported components and invite retaliation from trading partners — and allies — like the European Union and Canada.

ASIA'S DAY: Earlier, before Trump's comments were aired, most Asian markets finished higher. Japan's Nikkei 225 bucked the regional trend, losing 0.3 percent to 22,697.88. South Korea's Kospi added 0.3 percent to 2,289.19. Hong Kong's Hang Seng gained 0.8 percent to 28,224.48. The Shanghai Composite Index rebounded 2.1 percent to 2,829.27. Australia's S&P-ASX 200 increased 0.4 percent to 6,285.90.

YUAN DECLINES: The People's Bank of China set the Chinese currency's central parity rate to 0.9 percent weaker against the dollar on Friday. If the yuan continues to depreciate, goods exported to China will become more expensive to consumers there. Chinese exports would also be relatively cheaper, possibly balancing out suggested increases in tariffs by the Trump Administration.

ANALYST'S TAKE: "One theory is that the PBOC is depreciating the yuan because it has not enough ammunition to fight a dollar-for-dollar increase in tariffs. The markets are very risk-off. There is a loss in confidence right now," said Francis Tan, an economist at UOB Bank.

CURRENCIES: The U.S. dollar was trading at 112.45 yen, roughly unchanged from Thursday. The euro rose to $1.1651 from $1.1644.

OIL: Benchmark U.S. crude added 8 cents to $69.54 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, gained 6 cents to at $72.64.