China-US Tiff Hammers Hong Kong, Shanghai Stocks

Hong Kong and Shanghai stocks sank on Friday on rumbling China-US tensions and following a jump in US jobless claims that fanned worries about the economic recovery.

The Hang Seng Index tumbled 2.2 percent, to 24,705.

On the mainland, the Shanghai Composite Index dived 3.9 percent, to 3,196 while the Shenzhen Composite Index tanked 5 percent, to 2,138.

The losses come at the end of another tough week for markets, which have shown signs of stuttering after a months-long rally from their March trough.

But, while the move spooked investors, former Chinese diplomat Wang Yiwei said it was not as bad as it could have been.

"It's not possible to carry out an entirely equivalent action, but choosing Chengdu shows China wants to reduce the harm made to bilateral relations," he told Bloomberg News. "The operations out of Chengdu are not the most high-profile of the US mission in China, compared to say Shanghai."

Markets were already in the red following a steep drop on Wall Street sparked by news that 1.4 million Americans applied for jobless benefits last week, the first week-on-week rise since the start of the crisis.

Sydney, Singapore, Jakarta and Bangkok retreated more than 1 percent.

Mumbai eased 0.6 percent and Seoul was 0.7 percent off, while there were also losses in Taipei, Manila and Wellington. (AFP)