Dow tumbles more than 700 points after Trump's China tariff push

The threat of a global trade war pushed benchmark equity indexes in the United States and Europe deep into the red on Thursday and cut into commodity prices, a day after the Federal Reserve raised interest rates as expected.

U.S. President Donald Trump signed a presidential memorandum on Thursday that could impose tariffs on up to $60 billion US worth of imports from China. Under the terms of the memorandum, Trump will target the Chinese imports only after a consultation period.

The Dow Jones Industrial Average fell sharply at the end of the trading day to close down724.42 points, or 2.93 per cent, at 23,957.89,the S&P 500 was off by 68.24 points, or 2.52 per cent, at 2,643.69, andthe Nasdaq Composite dropped 178.61 points, or 2.4 per cent, ending at 7,166.68.

Equity markets were down worldwide, with the one per cent increase in Japan's Nikkei the only positive among major indexes for the day.

Canadian stocks did not escape the selling. The S&P/TSX composite index fell275.35 points, or 1.76 per cent, to end at15,399.93.

China blamed U.S. export restrictions for its record trade surplus with the United States, but expressed hope that a solution can be found to settle trade issues.

China also gingerly raised a key short-term interest rate.

'Very unsettled'

"Markets are saying that these tariffs are going to cut into the global growth story that looked pretty strong just a few weeks ago. The prospect of more tariffs are making markets very unsettled and you're going to see choppy trading until we see the effect they are having on earnings," said Jamie Cox, a managing partner for Harris Financial Group.

Those jitters, plus weaker than expected German business confidence data, caused European shares to fall 1.6 per cent.

The dollar index rose 0.12per cent, with the euro down 0.22per cent to $1.2311. The yen rose to a three-week peak against the dollar as traders piled into the Japanese currency in a safe haven move.

The Canadian dollar was down by 0.11 of a cent, trading at 77.39cents US.

The Fed raised its key rate by 25 basis points to a range of 1.50 per cent to 1.75 per cent on Wednesday and flagged at least two more increases for the year, short of the three that some economists had been predicting.

Shares in U.S. social media giant Facebook fell 2.66per cent. Chief executive Mark Zuckerberg apologized for a "major breach of trust" over how it had handled data belonging to 50 million users. That did little to ease investor worries about the cost to fix mistakes and lawmakers' dismay that his response did not go far enough.

Concern about a trade war between the world's two largest economies also put commodity markets on guard.

U.S. crude fell 87 cents to settle at $64.30US per barrel and Brent, the international oil benchmark, fell 56 cents, or 0.8 per cent, to $68.91 US a barrel.