By Jon Sindreu 

Global stocks headed lower Monday, as investors continued to parse the impact of a trade spat between the U.S. and China.

The Stoxx Europe 600 fell 0.7% in early European trade and futures pointed to an 0.6% opening loss for the S&P 500.

In Asia, Chinese stocks edged down, with Hong Kong's Hang Seng and the Shanghai Composite shedding 1.1% and 1.3%, respectively. Japan's Nikkei Stock Average closed down 0.8%.

Investors around the globe have been spooked by the prospect of a full-blown trade war between the U.S. and China. While the tariffs so far announced by the U.S. administration--and China's retaliatory measures--amount only to a small amount of goods, analysts fear that tensions could escalate and spread across other major economies.

President Donald Trump now also plans to bar many Chinese companies from investing in U.S. technology firms.

Shares of car makers are now seen by many analysts as a gauge of how much stock markets are being rattled by trade concerns: They are down 0.9% and 6.5% on the month in the U.S. and Europe, respectively, compared with a 1.8% rise for the S&P 500 and a 0.2% fall for the Stoxx Europe 600.

Economists are also less optimistic about growth in Europe and emerging markets than they were earlier in 2018, further dampening investor sentiment.

"We've moved away from the synchronous global expansion," said Bob Baur, chief global economist at Principal Global Investors.

On Sunday, the People's Bank of China said it would cut the amount of reserves banks are required to keep with the central bank, a move that is often associated with the need to free up liquidity to prop up the currency.

After strong gains in the yuan against the dollar earlier this year, the U.S. currency has now made up all the lost ground. The WSJ Dollar Index, which tracks the dollar against a basket of currencies, was flat Monday, and 10-year Treasury yields edged down to 2.874% after closing at 2.902% last week.

Meanwhile, the Turkish lira rose 2.2% on the day against the U.S. dollar, after incumbent President Recep Tayyip Erdogan's victory in Sunday's presidential and parliamentary elections, even though the Turkish currency has been under pressure in recent months due in part to Mr. Erdogan's policies--chiefly, the perceived lack of independence of the central bank.

"This somewhat counterintuive reaction is due to the elimination of the worst-case scenario of a hung parliament--a scenario, which would only create a period with uncertainty and a political deadlock," wrote Morten Lund, an analyst at Nordea Bank AB.

In commodities markets, oil prices retraced some of Friday's gains, obtained after major oil producers agreed to only modest increases in production. Brent, the global benchmark, was down 1.7% to $74.04 a barrel Monday.

Write to Jon Sindreu at jon.sindreu@wsj.com

(END) Dow Jones Newswires

June 25, 2018 03:55 ET (07:55 GMT)