Asian stocks drop as US-China trade war escalates

Asian stock markets sank on Monday after a sharp escalation in the US-China trade war rattled investors.

On Friday, US President Donald Trump announced tariff hikes on effectively all Chinese imports to the US.

It came after Beijing said it would impose fresh duties and raise tariffs on US imports into China.

In China, Hong Kong's Hang Seng index slid 3.2% while the Shanghai Composite gave up 1.3%.

Japan's benchmark Nikkei 225 index dropped 2.3%. The Chinese yuan weakened to a fresh 11-year low against the US dollar. The onshore yuan was around 7.15 per dollar in morning Asian trade.

Sharp falls in the yuan earlier this month prompted the US to officially name China a "currency manipulator", adding to tensions between the two countries.

"The trade war between the US and China has escalated dramatically," Louis Kuijs, head of Asia Economics at Oxford Economics said.

"This tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become."