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| - Most equities fell Wednesday as tensions between China and the US flared up again, biting into the previous day's strong rally, with optimism over a possible coronavirus vaccine also tempered by concerns about the slow progress of new US stimulus talks. News that trials on a vaccine had shown early promise provided a much-needed boost to equities, particularly as a spike in new infections around the world has caused governments to reimpose business-strangling containment measurements. But after a short period of relative calm, China-US frictions returned to the fore after Beijing said it had been ordered to close its Houston consulate, escalating a standoff between the superpowers. The move comes with the two at loggerheads on a laundry list of issues, from trade to Beijing's handling of the coronavirus pandemic and its policies in Hong Kong, Xinjiang and the South China Sea. "China urges the US to immediately withdraw its wrong decision, or China will definitely take a proper and necessary response," said foreign ministry spokesman Wang Wenbin, adding that Beijing was told Tuesday that the consulate would have to close. "It is a political provocation unilaterally launched by the US side, which seriously violates international law... and the bilateral consular agreement between China and the US," Wang said. The news emerged towards the end of the Asian trading day and sparked a sell-off in markets that were still open. Hong Kong led losses, tumbling 2.3 percent after rising more than two percent on Tuesday, and following figures showing another record rise in new infections in the city that has led to new fears of tighter restrictions being imposed. Tokyo shed 0.6 percent and Sydney lost 1.3 percent, while Singapore, Manila, Bangkok, Wellington and Jakarta were also down. London, Paris and Frankfurt were also all in the red. But Shanghai rose 0.4 percent, Mumbai added 0.1 percent and Taipei put on 0.6 percent. "This is a very fragile market, and the last thing traders need is to deal with another unwanted episode of Axis vs. Allies," said AxiCorp's Stephen Innes. "Hopefully, this is little more than something lost in translation, and US-China tensions remain at the pillow fight level. So I think it time to hold the course until more clarity is shed on the situation as the Huston consulate seems like an unlikely platform to escalate US-China tensions." With EU leaders finally locking in their $860 billion deal on Tuesday, attention turns to Washington, where Republicans are struggling to put together a new bill to support the world's top economy, with the $3 trillion of measures passed earlier this year about to dry up at the end of the month. The wall of government cash and central bank back-stop, along with similar measures in other countries, have helped fire a surge in equities across the planet since they hit their March depths. However, while Democrats have drawn up a new $3.5-trillion plan, Republicans and officials in the White House are bogged down trying to draw up their own package, which is said to be around $1 trillion. Among the sticking points are the extension of a supplement to unemployment benefits and Donald Trump's desire for tax cuts, and with Congress due to take a break in August there is a concern a deal will not be agreed, leaving millions without cash. Still Trump said he was optimistic, telling a White House briefing: "We're working very hard on it, we're making a lot of progress. The euro held gains against the dollar following the EU agreement and was sitting at its highest levels since early 2019, while the Federal Reserve's ultra-low interest rates continue to help higher-yielding currencies including the Australian dollar, Indonesian rupiah and South Korean won. The increase in China-US tensions, expectations interest rates will remain low for some time, and ongoing uncertainty over the spread of COVID-19, have also led traders into gold, which is considered a hedge against turmoil. The metal was sitting above $1,850 an ounce Wednesday and is approaching its record high above $1,900. The rally in gold, which is up almost a quarter this year, also helped drive silver to a seven-year high of $22.84 per ounce. Tokyo - Nikkei 225: DOWN 0.2 percent at 22,751.61 (close) Hong Kong - Hang Seng: DOWN 2.5 percent at 25,057.94 (close) Shanghai - Composite: UP 0.4 percent at 3,333.16 (close) London - FTSE 100: DOWN 0.5 percent at 6,237.27 Euro/dollar: DOWN at $1.1515 from $1.1522 at 2100 GMT Dollar/yen: UP at 106.93 yen from 106.77 yen Pound/dollar: DOWN at $1.2651 from $1.2733 Euro/pound: UP at 91.01 pence from 90.49 pence West Texas Intermediate: DOWN 0.9 percent at $41.53 per barrel Brent North Sea crude: DOWN 0.7 percent at $44.01 per barrel New York - Dow: UP 0.6 percent at 26,840.40 (close) dan/je
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