Traders have been spooked after Donald Trump said the US was 'not ready' to make a trade deal with China

London (AFP) - European stock markets dropped Monday as escalating protests in Hong Kong forced the closure of the financial hub’s airport.

London, Frankfurt and Paris all slid into negative territory approaching the half-way stage, having rallied at the open, as news of the shutdown spread.

“Reports that authorities have closed the airport in Hong Kong sent markets lower after what had been a positive open in Europe,” said Neil Wilson, chief analyst at traders

“Hong Kong has kind of been under the radar of most traders… but increasingly I feel like that this has the potential to spiral into a bigger market worry. Today’s moves highlight the risks,” he added.

All flights in and out of Hong Kong were cancelled late Monday after thousands of pro-democracy protesters flooded into the city’s airport to denounce police violence.

The abrupt shutdown came as the Chinese government signalled its rising anger at the protesters, denouncing some of the violent demonstrations as “terrorism”.

Hong Kong’s main shares index closed lower just as news of the shutdown emerged.

The Hang Seng Index ended with a loss of 0.44 percent to 25,824.72 points, as investors focused on the outlook for China-US trade talks.

Hong Kong airline Cathay Pacific meanwhile on Monday warned staff that they could be fired for supporting “illegal protests”, as the firm comes under pressure from Beijing.

The carrier’s stock slumped more than four percent after Beijing imposed new rules banning airline staff involved in the protests from flights to or over the mainland.

On currency markets, the euro steadied versus the dollar having suffered Friday on Italian political woes.

The European single currency meanwhile hit an almost three-year high versus sterling owing to lingering Brexit uncertainty, before the pound recovered.

Oil prices dropped, hit by the trade war’s impact on crude demand and following Friday’s rally that came on the back of producer kingpin Saudi Arabia’s pledge to lower output.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.5 percent at 7,215.09 points

Frankfurt - DAX 30: DOWN 0.3 percent at 11,659.49

Paris - CAC 40: DOWN 0.5 percent at 5,300.62

EURO STOXX 50: DOWN 0.4 percent at 3,321.47

Hong Kong - Hang Seng: DOWN 0.4 percent at 25,824.72 (close)

Shanghai - Composite: UP 1.5 percent at 2,814.99 (close)

Tokyo - Nikkei 225: Closed for a public holiday

New York - Dow: DOWN 0.3 percent at 26,287.44 (close)

Euro/dollar: DOWN at $1.1199 from $1.1202 at 2055 GMT on Friday

Pound/dollar: UP at $1.2080 from $1.2034

Euro/pound: DOWN at 92.67 pence from 93.09 pence

Dollar/yen: DOWN at 105.46 yen from 105.62 yen

Brent North Sea crude: DOWN 51 cents at $58.02 per barrel

West Texas Intermediate: DOWN 81 cents at $53.69 per barrel