Chinese shares slumped to fresh two-years lows on Thursday and were set for their worst monthly performance in years as trade tensions with the United States and worries about debt dimmed the outlook for China's economy. Hong Kong's Hang Seng tumbled 1.8 percent to 28,356.26.
Spot gold XAU= dropped 0.3 percent to $1,255.27 an ounce. Stocks in Taiwan, Singapore and other Southeast Asian markets were mostly lower.
"After a lot of saber-rattling, we are seeing Shanghai suffering a lot more than Wall Street, so clearly the first round (of trade war) has been won by America". Dow futures were flat while futures for the S&P 500, which on Wednesday closed at its lowest in almost a month, were up less than 0.1 percent. The dollar index.DXY, which measures the greenback against a basket of six other currencies, was up 0.63 percent at 95.249, on pace for its second straight day of gains.
The United States' friendlier stance on its trade relationship with China led global stock markets slightly higher on Wednesday, despite a 2 percent slide in Chinese equities, and drew the USA dollar toward its second straight day of gains.
The S&P 500 .spx still only managed to add 0.22 percent overall, while the Dow .DJI rose 0.12 percent and the Nasdaq .IXIC 0.39 percent.
The fresh report highlighted the clash between Beijing's insistence it had honored market-opening pledges made when it joined the World Trade Organization in 2001 and arguments by the U.S. and the European Union that China improperly hampered access to emerging industries and pressured foreign companies to hand over technology. It didn't address complaints Beijing hampers access to promising industries and that plans for state-led development of Chinese champions in electric cars and other industries violate its free trade commitments.More news: North Korea upgrades nuclear facility despite Trump-Kim summit, satellite images show
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"China's growth has brought great opportunities to trading partners all over the world", Deputy Commerce Minister Wang Shouwen said at a news conference. But the gains evaporated after Larry Kudlow, Trump's top economic adviser, said in an interview with Fox Business that it should not necessarily be viewed as a softer stance.
Separately, top USA economic advisor Larry Kudlow said the Trump administration has no intention of backing down from the current China situation.
Four days after the European Union imposed tariffs on American motorcycles, bourbon, orange juice and other products in response to USA steel and aluminium tariffs, Lighthizer said there was no legal basis for the European Union response.
The trade-sensitive Australian dollar earlier fell 0.3% to US$0.7371, edging back towards a 13-month low of US$0.7345 plumbed last week.
United States crude added 17 cents to US$70.70, having surged 3.6 per cent overnight, while Brent climbed 18 cents to US$76.49 a barrel. The euro gained slightly to $1.1647 from $1.1646.
CURRENCIES: The dollar eased to 110.17 yen from 110.20 Japanese yen in late trading Wednesday.