(Reuters) – European shares sank to a two-month low on Monday as a global sell-off spurred by trade tensions deepened, sending China’s yuan to its lowest in more than a decade and sinking trade-sensitive mining, luxury and technology stocks.

The pan-European STOXX 600 index fell 2.3%, which, taking into account Friday’s losses, made for the biggest two-day drop in more than three years as traders dumped shares in favour of perceived safe-havens like government bonds.

Mining groups Rio Tinto (RIO.L) and BHP (BHPB.L) fell more than 2%, while steel producer ArcelorMittal (MT.AS) lost more than 4% as Beijing allowed the yuan CNY=CFXS to breach 7-per-dollar, making copper and iron more expensive in their biggest global market. [IRONORE/] [MET/L]

The commodities-linked stocks index .SXPP fell 2.9% to its lowest in seven months.

The yuan’s move on Monday was viewed as a clear sign China would not back down in the face of President Trump’s threat of new tariffs on imports, meaning the trade conflict may get worse. Trump himself called the move “currency manipulation” and a “major violation”.

“Today’s move puts added pressure on the equity markets globally because obviously … China is not giving in, China is fighting back,” said Andre Bakhos, Managing Director at U.S.-based New Vines Capital. “Nobody likes this uncertainty.”

Trump’s threat last week to slap 10% tariffs on another $300 billion in Chinese imports, plus disappointment about the U.S. Federal Reserve’s rhetoric, have halted what had been a steady recovery for stock markets since a sell-off in May.

Luxury stocks such as Louis Vuitton owner LVMH (LVMH.PA) and watchmakers Richemont (CFR.S) and Swatch (UHR.S), which derive a large part of their revenue from China, gave up between 3.9% and 6.8%, pushing the personal and household goods index .SXQP down 3.5% – the most among major sectors.

Software company SAP (SAPG.DE) was among the biggest decliners on the STOXX 600, while chipmakers AMS (AMS.S), Infineon (IFXGn.DE) and STMicroelectronic (STM.MI) also fell.

Asia-focused bank HSBC (HSBA.L) was also one of the biggest drags on the main index, down 3%, after it announced the departure of Chief Executive Officer John Flint, a shock move aimed at speeding up progress on priority areas such as the turnaround of its U.S. business.

Gas producer Linde (LIN.N) rose 2.5% and was the biggest boost for the STOXX 600 after quarterly results topped forecasts and underpinned a second increase to full-year forecasts this year.

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