U.S. stocks finished off the lows of the day after President Donald Trump said a trade deal with China is still possible even as a deadline approached for reciprocal tariffs to be imposed by the two feuding countries. The yuan fell to its weakest since January.

The S&P 500 declined for a fourth consecutive session, leaving the index on pace for its worst week of the year. The bellwether had slumped as much as 1.5 per cent before Trump said he received a “beautiful letter” from Chinese President Xi Jinping and that the two leaders would probably speak by phone. The Stoxx Europe 600 fell the most this year, while the MSCI Asia Pacific gauge dropped the most in six weeks. The gap between three-month and 10-year Treasury rates briefly turned negative, traditionally a recession warning.

“When you think about just how much uncertainty there is on that front, the dip we’re seeing is really not that substantial,” said Mike Loewengart, vice president of investment strategy at E*TRADE Financial. “To be sure things could get far worse, but if you look at the remarkable trajectory of the market so far this year, this week’s declines are a minor speed bump at this point.”

Trade discussions will resume hours after concerns flared again about the strength of the Chinese economy — the country’s credit growth slowed in April to a level below all 27 estimates in a Bloomberg survey. Beijing has warned it will retaliate should the U.S. hike tariffs as advertised on Friday.

“If tariffs are increased at 12:01 a.m. Friday, the decline in risk assets is likely to intensify,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI.

Meanwhile, simmering geopolitical tension elsewhere -- from North Korea testing missiles again to renewed stress between America and Iran -- added to the gloomy mood. Crude oil edged lower and emerging-markets stocks tumbled. Developing-nation currencies weakened. The lira trimmed some losses after Turkey’s central bank unexpectedly raised borrowing costs for the country’s lenders.

Here are some notable events coming up:

The U.S. releases the April CPI report Friday.

These are the main moves in markets:

STOCKS

The S&P 500 Index fell 0.3 as of 4:03 p.m. ET, while the Nasdaq Composite Index dropped 0.4 per cent and the Dow Jones Industrial Average slumped 0.5 per cent. The Stoxx Europe 600 fell 1.7 per cent. The MSCI Emerging Market Index dropped 2.1 per cent. The MSCI Asia Pacific Index slumped 1.4 per cent.

CURRENCIES

The Bloomberg Dollar Spot Index was little changed. The euro rose 0.2 per cent to US$1.1219 while the yen strengthened 0.4 per cent to 109.72 per U.S. dollar. The British pound was little changed at US$1.3015. The MSCI Emerging Markets Currency Index eased 0.6 per cent.

BONDS

The yield on 10-year Treasuries fell three basis points to 2.45 per cent. Germany’s 10-year yield fell less than one basis point to negative 0.05 per cent.

COMMODITIES

West Texas Intermediate fell 0.9 per cent to US$61.57 a barrel. Gold rose 0.2 per cent to US$1,284 an ounce. The Bloomberg Commodity Index fell 0.6 per cent, the third decline in four days.