LONDON/TOKYO (Reuters) – Global stocks were slightly lower on Wednesday as investors sought safety in bonds, the Japanese yen and Swiss franc in muted trade amid renewed worries over the U.S.-China spat after reports Washington has another Chinese tech firm in its sights.

Relief over Washington’s temporary relaxation of curbs against China’s Huawei Technologies evaporated after reports that the White House is considering further sanctions on Chinese video surveillance firm Hikvision.

Fears of another blacklisting reinforced worries that U.S. President Donald Trump is looking beyond sealing a trade deal with China to a potentially bigger battle aimed at curbing Beijing’s technology ambitions.

“I think the debate is just starting about what the implications of all this could be if it escalates. It’s my biggest concern,” said Simon Webber, lead portfolio manager on the global & international equities team at Schroders.

The limits which were imposed on Huawei last week and eased on Monday had sent shivers through global semiconductor stocks as investors worried about disruption to suppliers of the world’s No. 2 smartphone maker.

“If we get retaliation, if we start deconstructing supply chains, if we get countries asking whether they can rely on products and services overseas, then we’ll have much more uncertainty and a much more worrying environment,” said Webber.

MSCI world equity index, which tracks shares in 47 countries, was down slightly at 0905 GMT, as investors shunned assets considered risky in times of economic and political strife.

The reports rattled European and Asian stocks, with the euro-zone STOXXE down 0.1%.

London’s FTSE 100 blue chips bucked the trend, rising 0.4% as sterling fell amid renewed worries about the country’s messy exit from the European Union.

The Chinese markets, which have endured a volatile few months, were on the backfoot. The Shanghai Composite Index closed down 0.5%.

The threat dampened Australia’s post-election optimism slightly, but stocks still hovered near the 11-year highs scaled on Monday.

“Some in the markets will continue to cling on to hopes of the United States and China reaching an agreement at the upcoming G20 meeting,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

“But the ongoing trade conflict looks to be a protracted one, and its potentially negative impact on various economies is becoming a running concern.”

Leaders from G20 nations are scheduled to gather for a summit in Japan at the end of June.

Australia’s stocks index is the only major global bourse to notch up gains since Trump ramped up his battle with Beijing on May 6, largely due to the election euphoria, while South Korea’s KOSPI is the biggest loser.

(GRAPHIC: Global indices – tmsnrt.rs/2WiBW0q)

RISK OFF

With the risk appetite off, investors sought havens in the Swiss franc, Japanese yen and German government bonds.

The yen strengthened away from two-week lows against the dollar, rising 0.1% to 110.39 yen, while the Swiss franc was higher against the euro and the dollar.

Moves across all financial markets were largely muted, though, as many investors preferred to keep to the sidelines.

The standout was the pound, which was down 0.2% at $1.2712, its lowest since January amid a deepening crisis over the UK’s exit from the EU after Prime Minister Theresa May’s final gambit failed dramatically.

The euro was little changed at $1.1164.

In commodities, U.S. West Texas Intermediate (WTI) crude futures were down 0.6% at $62.567 per barrel after American Petroleum Institute data showed that U.S. crude stockpiles rose unexpectedly last week. [O/R]

Oil was also pressured by Saudi Arabia reiterating that it would aim to keep the market balanced and try to reduce tensions in the Middle East.

Brent crude futures lost 0.7% to $71.69 per barrel.

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