© Reuters. A man is reflected on a stock quotation board outside a brokerage in Tokyo

By Hideyuki Sano

TOKYO (Reuters) – Global stocks tumbled and the safe haven yen and Swiss franc gained in early Asian trade on Thursday, on signs Washington and Beijing were still wide apart on trade issues and were making no progress in deputy-level talks.

The South China Morning Post (SCMP) reported the Chinese delegation, headed by Vice Premier Liu He, was planning to leave Washington after just a day of minister-level meetings, instead of as originally planned on Friday.

“Barring any surprise today, it looks like their talk is breaking down. The tariff will be hiked. The situation looks dire,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE:) Securities.

S&P500 mini futures slumped as much as 1.3%, though they pared some losses following a tweet from a CNBC reporter that the White House said it was not aware of change in Liu’s plans. U.S. stock futures last stood down 0.7%.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.31% while Japan’s slip 0.11%.

The SCMP report on the U.S.-China trade talks came less than a couple of hours after U.S. President Donald Trump told reporters he thought China wanted to make a trade deal more than he did.

Chinese government officials told Reuters that Beijing has lowered expectations for significant progress from this week’s trade talks with the United States, upset by the blacklisting of Chinese companies.

Top negotiators from the two countries were scheduled to meet in Washington on Thursday and Friday to try to end a bruising 15-month-old trade war.

Without significant progress, Trump is set to hike the tariff rate on $250 billion worth of Chinese goods to 30% from 25% next Tuesday.

China is unlikely to be willing to make an easy compromise with a U.S. president who seems increasingly vulnerable to domestic political pressure as opposition Democrats seek to impeach him, Mitsubishi’s Fujito added.

U.S. Democratic presidential contender Joe Biden called for the impeachment of Trump for the first time in a deepening partisan fight over a congressional investigation of the Republican president.

Before the report over stalled trade talks, share prices had gained on Wednesday, with the rising 0.91% on hopes of a possible compromise between the world’s two biggest economies.

In the currency market, the yen advanced up to 0.4% to 107.035 to the dollar and last stood at 107.33.

The Swiss franc also gained as much as 0.4% to 0.9923 franc per dollar.

The dropped 0.4% in offshore trade to 7.1685 per dollar, touching its lowest in five weeks before bouncing to 7.1461.

The euro firmed slightly to $1.0986.

Sterling wobbled near one-month lows against the dollar and the euro as hopes of a break-through on a key sticking point for a Brexit deal were dashed.

Northern Ireland’s Democratic Unionist Party, a coalition partner in the British government, said it would emphatically oppose a reported European Union concession on the Irish backstop under any Brexit deal.

The pound last stood at $1.2212, near Tuesday’s five-week low of $1.2196.

The Turkish lira retreated to six-week lows as Turkish troops, together with their Syrian rebel allies, attacked Kurdish militia in northeast Syria, opening a fresh chapter in Syria’s eight-year-old civil war.

The lira fell to 5.8777 per dollar, the lowest since its flash crash on Aug. 26.

U.S. Treasuries yield slipped back after having risen to 1.594% on Wednesday, pressured partly by this week’s heavy bond supply.

The 10-year U.S. Treasuries yield dropped 3.3 basis points on Thursday to 1.554%.

The price of front-end Fed funds rate futures gained, however, on increasing bets on more rate cuts by the U.S. Federal Reserve.

The November contract is almost fully pricing in a 0.25 percentage point cut on Oct. 30.

Oil prices also slid on the report on U.S.-China talks.

futures fell 0.55% to $58.00 a barrel while U.S. West Texas Intermediate (WTI) crude lost 0.48% to $52.34 per barrel.

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