Asian, European markets drop over China-US tensions

LONDON, Aug 2 (AFP): Asian and European stock markets fell Tuesday as investors dumped risky equities on spiking US-China tensions over a possible visit by House Speaker Nancy Pelosi to Taiwan.

"Tensions ramped up on reports that Pelosi is due to visit Taiwan later this evening," noted CMC Markets analyst Michael Hewson.

Traders were already skittish after a string of data showed economies beginning to take a hit from surging inflation and central bank interest rate hikes aimed at taming prices.

A possible meeting between Pelosi and Taiwanese President Tsai Ing-wen is sure to anger Beijing, which views the island as its territory and has said the White House was playing "with fire".

While observers do not think the move will spark a conflict, US officials said China was preparing possible military provocations that could include firing missiles in the Taiwan Strait or "large-scale" incursions into Taiwan's airspace.

Heightened tensions between the world's two superpowers have sent shivers through trading floors, compounding worries that Russia's invasion of Ukraine could escalate into a wider war.