European stocks slipped on Monday as concerns about an escalating fallout from a US crackdown on China’s Huawei Technologies offset a slightly more positive tone on trade.

Asian shares managed to reverse some of last week’s heavy losses on Monday, after the United States said it would lift tariffs in North America, as investors cheered apparent wins by Conservative incumbent parties in elections in Australia and India.

But the mood did not carry over to European markets. The pan-European Euro STOXX 600 fell 0.1%, the German DAX slipped 0.17%, while France’s CAC 40 weakened 0.21%.

US President Donald Trump’s government added Huawei to a trade blacklist last week, imposing restrictions that will make it difficult to do business with US companies.

The repercussions of that move became evident as Google suspended some business with Huawei.

In Europe, chipmakers Infineon Technologies, AMS and STMicroelectronics dropped sharply after Nikkei Asian Review reported that German chipmaker Infineon had halted shipments to Huawei. The company had no immediate comment.

“Market volatility continues to stem from announcements and interpretations of what is going on in trade disputes between the US and its trading partners, but principally China,” said Jasper Lawler, head of research at London Capital Group.

“Whilst the latest headlines over Canada are supportive of sentiment, a news bite which increases risk aversion could be just around the corner. Investors know this and are on edge right now. That won’t change overnight. China are unlikely to take Google’s suspension of business with Huawei lying down.” On the positive side, a US decision on Friday to remove tariffs on Canadian steel and aluminium prompted Canada’s foreign minister to vow the quick ratification of a new North American trade agreement.

The MSCI index of world shares, which tracks shares in 47 countries, rose 0.08%. It remains some 3.6% below its 2019 highs as the sudden return of trade war jitters sent the stock market’s strong rally into reverse.

US S&P 500 e-mini futures turned higher, rising 0.23% following losses on Wall Street on Friday.

Prominent investor Jim Rogers, who co-founded the Quantum Fund with George Soros, told the Reuters Global Markets Forum that he believed Washington and Beijing would soon announce a trade deal, although the current spat would not be the last time Trump tried to exploit the prospect of a trade war.

“These are negotiating tactics from Mr. Trump at the moment. What will happen is we will have some good news, the market will have a rally. It will probably be the last rally,” he said.

Oil prices jumped after Saudi Energy Minister Khalid al-Falih said that there was consensus among the members of the Organization of the Petroleum Exporting Countries to maintain production cuts to “gently” reduce inventories.

Both US crude and Brent crude jumped more than 1.1% on Monday, with West Texas Intermediate fetching $63.5 a barrel and Brent crude at $73.04 per barrel.

Rising tensions in the Middle East, which have supported oil prices, ratcheted up another notch on the weekend as Trump issued new threats, tweeting that a conflict with Iran would be the “official end” of that country.

In currency markets, the Australian dollar jumped nearly 1% after the centre-right Liberal National Coalition pulled off a shock win in a federal election, beating the centre-left Labor party.

The Indian rupee also rallied after exit polls pointed to a majority for Prime Minister Narendra Modi’s Bharatiya Janata Party and allies. The rupee was last up 1.1%.

China’s offshore yuan rebounded after touching its weakest against the dollar since November on Friday. It last traded up 0.1% at 6.9441 per dollar.

Sources told Reuters China’s central bank is expected to use foreign exchange intervention and monetary policy tools to stop it weakening past the 7-per-dollar level in the near term.

The dollar slipped slightly against the euro to $1.1161.

Sterling recovered 0.3% to $1.2751 after suffering its biggest weekly loss since 2017 after an apparent collapse in Brexit talks in London.

German government bond yields moved slightly higher. That followed a fall towards new 2-1/2 year lows last week after investors flocked to safe-haven debt.

Austrian yields held firm after a scandal prompted Chancellor Sebastian Kurz to pull the plug on his coalition with the far right at the weekend, raising the chances of a snap election.

Oil rose to multi-week highs on Monday after opec indicated it will likely maintain production cuts that have helped support prices this year.

Brent crude was up by 96 cents, or 1.3%, at $73.17 a barrel by 0227 GMT, having earlier touched $73.40, the highest since April 26.

US West Texas Intermediate crude was 82 cents, 1.3%, higher at $63.58 a barrel. The U.S. benchmark reached $63.81 earlier, the highest since May 1.

Saudi Energy Minister Khalid al-Falih said on Sunday there was consensus among the Organization of the Petroleum Exporting Countries (opec) and allied oil producers to drive down crude inventories “gently” but he would remain responsive to the needs of a “fragile market.”

Reuters