TOKYO (Reuters) – Asian shares slipped from eight-month highs on Wednesday as the International Monetary Fund lowered its global growth outlook and as the United States and Europe locked horns over tariffs in a fresh escalation of trade tensions.

European shares were poised to begin lower, with Britain’s FTSE futures dipping 0.1 percent and Germany’s DAX futures inching down 0.02 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.1 percent, a day after it hit its highest since Aug. 1.

The Shanghai Composite Index fell 0.4 percent and Japan’s Nikkei lost 0.7 percent.

On Wall Street, the S&P 500 gave up 0.61 percent and the Nasdaq Composite declined 0.56 percent on Tuesday.

MSCI’s broadest gauge of the world’s stock markets was down slightly from Tuesday’s six-month peak but it was still up roughly 19 percent from a near two-year trough marked in December.

Although earnings forecasts have been pegged back recently, share markets have been propped up by hopes of a trade deal between Washington and Beijing and optimism that the Chinese economy may be bottoming out as policy support kicks in.

“The gap between the strength in global shares and sluggishness in the real economy has been widening,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

That view was reinforced on Tuesday when the IMF cut its forecast for world economic growth this year, saying the global economy is slowing more than expected and that a sharp downturn could require world leaders to coordinate stimulus measures.

U.S. data overnight added to the cautious mood, with job openings dropping to an 11-month low in February and raising doubts about the strength of U.S. labor market, which has so far been one of the few bright spots in the economy.

Global trade anxiety was another sore point for risk asset markets.

U.S. President Donald Trump threatened to impose tariffs on $11 billion worth of European Union products, heightening tensions over a long-running transatlantic aircraft subsidy dispute.

The move came as markets remain on edge as negotiators try to hammer out trade deals with China and neighbors Mexico and Canada.

“This time it’s the United States and the European Union trading words and announcing retaliatory tariffs over subsidies to aircraft makers,” wrote economists at ANZ.

“Watch this space. It’s small-fry versus the U.S.-China spat, but unhelpful for sentiment.”

Global debt yields held mostly steady, with the 10-year U.S. Treasury yield at 2.49 percent, off its 15-month low of 2.340 percent touched late last month.

In a possible sign of investors’ strong appetite for bonds, Saudi Aramco is set to raise $12 billion with its first international bond issue after receiving more than $100 billion in orders.

It was a record breaking vote of market confidence for the oil giant despite concerns sparked after the murder of Saudi journalist Jamal Khashoggi in October.

Major currencies were little moved with an immediate focus on the European leaders’ summit and the European Central Bank’s policy meeting.

EU leaders are likely to grant British Prime Minister Theresa May a second delay to Brexit but they could demand she accepts a much longer extension as France pushed for conditions to limit Britain’s ability to undermine the bloc.

The euro held firm at $1.1260, extending its slow recovery from a four-week low of $1.1183 touched on April 2.

The British pound was little changed at $1.3059.

The dollar was flat at 111.125 yen, having fallen 0.5 percent so far this week.

Oil prices held firm after hitting five-month highs the previous day as fighting in Libya raised supply disruption concerns.

U.S. crude futures stood at $64.10 per barrel, up 0.2 percent after rallying to a five-month high of $64.79 on Tuesday.

Brent crude futures were at $70.63 per barrel and in reach of Tuesday’s five-month peak of $71.34.