Asian markets were mixed Monday with investors gripped by concerns about the US-China trade war after Donald Trump said he was prepared to walk away from next month's planned talks.
The president's comments spooked US investors and added to the sense of pessimism across world trading floors after the White House last week announced fresh tariffs on China and labelled it a currency manipulator.
Beijing responded by halting all purchases of US agricultural goods.
Trump said Friday it would be "fine" if the negotiations were called off, telling reporters: "We're not ready to make a deal but we'll see what happens." He added: "We have all the cards. We're doing well."
The negativity is being slightly offset by central banks' shift to softer monetary policy though there are growing concerns about the outlook for the global economy.
There was also some solace in remarks from key China hawk and top Trump adviser Peter Navarro, who said he still expected the talks to go ahead.
However, he raised concerns about Beijing's weak yuan and warned officials needed to move on key issues including subsidies to state firms, forced technology transfer and cyber intrusion.
- Sterling struggles -
"Equities remain sensitive to trade headlines even as some of the initial shock announcement of a new offensive to be launched on September 1 has worn off," said OANDA senior market analyst Alfonso Esparza.
"But with no clear olive branch being offered by either side the trade dispute has no end in sight, putting downward pressure on equities."
In early trade Hong Kong was up 0.3 percent and Shanghai added 0.7 percent while Seoul put on 0.5 percent and Taipei added 0.1 percent. But Sydney slipped 0.2 percent and Wellington eased 0.1 percent.
On currency markets the pound inched up against the dollar but remains under pressure after Britain last week said the economy contracted in the second quarter for the first time in nearly seven years, hit by the trade row and Brexit uncertainty.
Sterling is now wallowing around levels not seen since the start of 2017 and is headed for its lowest point in more than 30 years with the country looking set to leave the European Union without a divorce deal, which most observers say will be economically disastrous.
Oil prices dipped on worries about the impact of the trade war on demand and following Friday's rally that came on the back of producer kingpin Saudi Arabia's pledge to lower output.
- Key figures around 0300 GMT -
Hong Kong - Hang Seng: UP 0.3 percent at 26,026.34
Shanghai - Composite: UP 0.7 percent at 2,794.57
Tokyo - Nikkei 225: Closed for a public holiday
Euro/pound: UP at 93.12 pence from 93.09 pence at 2055 GMT on Friday
Pound/dollar: UP at $1.2036 from $1.2034
Euro/dollar: UP at $1.1208 from $1.1202
Dollar/yen: DOWN at 105.51 yen from 105.62 yen
West Texas Intermediate: DOWN 28 cents at $54.22 per barrel
Brent North Sea crude: DOWN 25 cents at $58.28 per barrel
New York - Dow: DOWN 0.3 percent at 26,287.44 (close)
London - FTSE 100: DOWN 0.4 percent at 7,253.85 (close)