London — Deflating hopes of a swift resolution to the Sino-US trade war knocked world stocks off three-week highs on Tuesday, while growing fears the US economy could be headed for recession sooner than expected weighed on the dollar. The rapprochement between US President Donald Trump and China’s Xi Jinping at the weekend Group of 20 (G20) meeting had fired up markets on Monday. But the upbeat mood quickly dissipated on scepticism that Washington and Beijing can resolve deep-seated differences on trade in the agreed three-month negotiating window. Adding to market woes, was an inversion of the short end of the US yield curve which raised the spectre of a possible US recession. Following declines on Asian bourses, where Japan’s Nikkei stock index closed 2.4% lower, the mood was sombre in Europe with the wider blue chip index slipping 0.3%. Frankfurt’s DAX and Paris’s CAC 40 fell 0.6% while MSCI’s index of world stocks declined 0.1%. “The initial relief rally was never going to last....

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