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| - Global stock markets and the dollar diverged Wednesday as investors balanced deteriorating China-US relations and Hong Kong protests against the gradual reopening of virus-hit economies. Nearing the half way stage, London, Paris and Frankfurt each won more than one percent, despite statistics agency INSEE warning that France's economy could contract 20 percent in the second quarter on the virus lockdown. Confidence was, however, boosted when European Union chief Ursula von der Leyen proposed a 750-billion-euro post-virus recovery fund for Europe. If she can win over sceptical member states to push it through, the stimulus package will be the biggest in EU history. This would add to mind-boggling amounts of stimulus and central bank pledges of support across the planet. Asian stocks mostly slid -- Hong Kong falling the hardest as police fired pepper-ball rounds as anti-China protesters took to the city's streets, with investors fearing the demonstrations could erupt into the worst unrest since last summer. "European markets are maintaining their positive mindset today despite ongoing fears over an impending breakdown in relations between the US and China," said IG analyst Joshua Mahony. "The threat of (Hong Kong) protests and potential US action is likely to drive underperformance for Asian stocks throughout the week, but European indices do seem to be more concerned with events closer to home." The broad trend across global markets has been upward for weeks as virus deaths and infections ease in most countries and governments begin to reopen their battered economies, fanning hopes for a recovery in the second half of the year. However, there was little fresh desire for risk assets with eyes on the simmering row between the world's top two economies, fuelled by Donald Trump's barracking of China over its role in the pandemic, and made worse this week by Beijing looking to tighten its grip on Hong Kong. The financial hub was thrown back into the spotlight Friday when Chinese officials proposed a controversial security law that many fear could ring the death knell for the city. And Trump appeared to agree, with his press secretary Kayleigh McEnany telling a briefing he had said it is "hard to see how Hong Kong can remain a financial hub if China takes over". Washington has already said it could terminate its preferential trading status over the issue. Markets are also fretting over reports that the US has warned it will impose sanctions on Chinese entities and officials if it goes ahead with the law. "Despite fears of the implications for Hong Kong in the event that the controversial Chinese security bill is passed, markets are understandably aware of the potential consequences for US-China relations," added Mahony. Concerns about the growing crisis have weighed on the yuan, which has lost almost three percent this year, with observers suggesting it could hit a record low. In Wall Street action on Tuesday, the Dow gained 2.2 percent as the New York Stock Exchange trading floor reopened after two months of closure. Oil prices slipped on China-US tensions, and after reports said Russia could begin easing up on its supply cuts in July. London - FTSE 100: UP 1.4 percent at 6,152.81 points Frankfurt - DAX 30: UP 1.6 percent at 11,688.22 Paris - CAC 40: UP 1.6 percent at 4,681.08 Milan - FTSE MIB: UP 1.3 percent at 18,087.16 Madrid - IBEX 35: UP 2.1 percent at 7,150.50 EURO STOXX 50: UP 1.7 percent at 3,049.42 Tokyo - Nikkei 225: UP 0.7 at 21,419.23 (close) Hong Kong - Hang Seng: DOWN 0.4 percent at 23,301.36 (close) Shanghai - Composite: DOWN 0.3 percent at 2,836.80 (close) New York - Dow: UP 2.2 percent at 24,995.11 (close) Brent North Sea crude: DOWN 1.0 percent at $35.82 per barrel West Texas Intermediate: DOWN 0.5 percent at $34.16 per barrel Euro/dollar: DOWN at $1.0967 from $1.0982 at 2100 GMT Dollar/yen: DOWN at 107.51 yen from 107.54 Pound/dollar: DOWN at $1.2307 from $1.2334 Euro/pound: UP at 89.11 pence from 89.04 pence dan-rfj/bcp/jh
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