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Treasury Secretary Bessent says Trump-Xi meeting still on

track

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Stocks fall, dollar gains versus riskier currencies

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Gold sets record above $4,100 per ounce

(Updates prices)

By Amanda Cooper

LONDON, Oct 14 (Reuters) - Global shares tumbled, and

safe havens such as bonds and gold rallied on Tuesday, as

investors grew uneasy over tensions between the United States

and China before talks between the two countries aimed

at striking a durable trade deal.

Markets had earlier joined the rebound from Monday's cash

session after U.S. Treasury Secretary Scott Bessent said

President Donald Trump remains on track to meet Chinese leader

Xi Jinping in South Korea for a two-day summit starting on

October 31. But he added fuel to the fire in an interview in the

Financial Times where he accused Beijing of trying to damage the

global economy.

As negotiations between Washington and Beijing intensify,

the two nations from Tuesday were charging port fees on ocean

shipping firms that move goods ranging from toys to crude oil.

'ESCALATE TO DE-ESCALATE'

"Both Washington and Beijing are posturing before the

November summit - escalate to de-escalate," said Marc Velan,

head of investments at Lucerne Asset Management in Singapore.

"Neither can afford a trade war heading into U.S. midterms."

Stocks in Europe, which have hit record highs this month,

were down 0.7%, echoing weakness in Asian markets, where

technology stocks got hit hard.

Futures on the S&P 500 and the Nasdaq fell

between 0.9% and 1%, suggesting there may not be a repeat of

Monday's rally, but a full reversal also looked unlikely.

"If one looks at the recent history of export controls and

charges for ships docking in ports, then it's been largely

interpreted as a path towards negotiation rather than a fresh

outbreak of hostilities on the trade front between the U.S. and

China," Investec chief economist Philip Shaw said.

"So yes, there is uncertainty, but you've had a huge rally,

not just in U.S. stocks, but a lot of global indices as well.

And while there are still some question marks over U.S.-China

trade friction, I'd interpret the latest sell-off as a bit of a

correction rather than a huge stepping-up of investor

uncertainty," he said.

Wall Street's main indexes had ended as much as 2.2% higher

on Monday, led by chipmakers, after Trump struck a more

conciliatory tone on trade tensions with China, reversing some

of the panic from Friday when Trump announced 100% tariffs on

China.

MARKET RISK BAROMETERS FLASH RED

Reflecting the increased investor angst, gold rose

0.5% to $4,130 an ounce, just shy of Tuesday's new record of

$4,179.48. In contrast, bitcoin, which tends to move in

line with other risk assets, fell 3.6% to $111,793, bringing

losses over the last week to nearly 12.5%.

In the foreign exchange market, the dollar gained an edge

over currencies that typically benefit when investors are

feeling confident, such as the pound or the Australian

dollar, which fell 0.5% and 1%, respectively against the

greenback.

The yen, which tends to act as a safe haven, strengthened

0.1% to 152.07 against the dollar after Japan's finance

minister said the country needs a new economic strategy that

deals with inflation rather than deflation.

The yield on the U.S. 10-year Treasury bond was 4.017%, down

3 basis points. The U.S. bond market was closed on Monday for a

public holiday.

Two-year yields, which are far more responsive to shifts in

expectations for U.S. interest rates, were down 4.6

bps at 3.48%, having fallen nearly 12 bps since Friday, marking

their largest two-day fall since early August.

Analysts at Danske Bank said any escalation in the trade war

would only increase the likelihood of the Federal Reserve

front-loading planned rate cuts.

Traders fully expect the Fed to cut rates this month and

into next year to combat a weakening labour market.

The euro dipped 0.13% to $1.1553 after French

President Emmanuel Macron rejected calls to resign on Monday, as

his latest government was threatened by two no-confidence

motions.

Brent crude fell 2.1% to $62 a barrel after an OPEC

report showed world oil supply is expected to closely match

demand next year, a contrast from last month's outlook, which

projected a shortfall.

(Additional reporting by Gregor Stuart Hunter in Singapore;

Editing by Lincoln Feast, Shri Navaratnam, Sam Holmes, Gareth

Jones and Timothy Heritage)