'The potential to spiral into a bigger market worry'

London (AFP) - Global stock markets dropped Monday as escalating protests in Hong Kong forced the closure of the financial hub’s airport, adding geopolitical worries to ongoing trade war tensions.

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

“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,” said Neil Wilson, chief analyst at traders Markets.com.

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.

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.

Taking their cue from Europe, US stock markets also opened lower, “with US-China trade tensions remaining elevated, global bond yields continuing to see pressure, while the markets await a heavy week of earnings from the retail sector and a flood of key economic reports,” said analysts at Charles Schwab.

“Moreover, the exacerbated unrest in Hong Kong is garnering attention and dampening sentiment as protests continued over the weekend,” they said.

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

In Argentina, the peso plummetted 14 percent after a crushing defeat for President Mauricio Macri in party primaries over the weekend.

- Key figures around 1335 GMT -

London - FTSE 100: DOWN 0.4 percent at 7,227.09 points

Frankfurt - DAX 30: DOWN 0.2 percent at 11,670.96

Paris - CAC 40: DOWN 0.4 percent at 5,307.00

EURO STOXX 50: DOWN 0.3 percent at 3,325.81

New York - Dow: DOWN 0.8 percent at 26,078.58

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

Euro/dollar: UP at $1.1215 from $1.1202 at 2055 GMT on Friday

Pound/dollar: UP at $1.2092 from $1.2034

Euro/pound: DOWN at 92.76 pence from 93.09 pence

Dollar/yen: DOWN at 105.19 yen from 105.62 yen

Brent North Sea crude: UP 11 cents at $58.64 per barrel

West Texas Intermediate: UP 29 cents at $54.79 per barrel