Market News

Gold and silver hit record highs on Monday while equity markets fell after Donald Trump revived trade war fears by threatening several European nations with tariffs over their opposition to the United States buying Greenland.

The US president has fanned already-rising geopolitical tensions this month by insisting that Washington would take control of the North Atlantic island, citing national security needs.

And on Saturday, after talks failed to resolve "fundamental disagreement" over the Danish autonomous territory, he announced he would hit eight countries with fresh levies over their refusal to submit.

He said he would impose 10 percent tariffs on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland from February 1 -- rising to 25 percent from June 1 -- if they did not agree to the takeover.

The announcement drew an immediate response, with a joint statement from the countries saying: "Tariff threats undermine transatlantic relations and risk a dangerous downward spiral."

The move also threatened a trade deal signed between the United States and the European Union last year, with German Foreign Minister Johann Wadephul telling ARD television: "I don't believe that this agreement is possible in the current situation."

Aides to French President Emmanuel Macron said he would ask the EU to activate a never-before-used "anti-coercion instrument" against Washington if Trump makes good on his threat.

The measure allows for curbing imports of goods and services into the EU, a market of 27 countries with a combined population of 450 million.

Bloomberg reported that member states were discussing the possibility of retaliatory levies on €93 billion ($108 billion) of US goods.

The prospect of a trade war between the global economic heavyweights shook markets, with safe-haven assets extending gains that had come on the back of Trump's threats against Iran last week and the US ouster of Venezuelan president Nicolas Maduro.

Gold, a key go-to in times of turmoil, hit a peak of $4,690.59, while silver struck $94.12.

On equity markets, Paris and Frankfurt opened more than one percent lower, while London was also deep in the red.

Tokyo, Hong Kong, Sydney, Singapore, Manila, Mumbai and Wellington retreated, though there were gains in Shanghai, Seoul, Taipei and Bangkok.

US futures sank.

The dollar also retreated against its peers, with the euro, sterling and yen all higher.

"The next signpost is whether this moves from rhetoric to policy, and that is why the concrete dates matter," wrote Charu Chanana, chief investment strategist at Saxo Markets.