TOKYO (Reuters) – Asian stocks tracked Wall Street losses on Thursday as latest exchanges between Beijing and Washington signalled the heightened risk of a prolonged trade war, stoking investors’ concerns about the impact on global economic growth.

“This kind of deliberately provoking trade disputes is naked economic terrorism, economic chauvinism, economic bullying,” China’s Vice Foreign Minster Zhang Hanhui said, as Beijing continued to dial up its rhetoric amid the festering trade war with the United States.

His comments came after Chinese newspapers reported that Beijing could use rare earths to strike back at Washington after U.S. President Donald Trump remarked he was “not yet ready” to make a deal with China over trade.

As investors switched out of equities safe-haven assets such as government bonds found favour, with yields on German benchmark debt approaching record lows.

The Shanghai Composite Index fell 0.8% and Hong Kong’s Hang Seng lost 0.35%.

Japan’s Nikkei was down 0.85% and Australian stocks shed 0.7%.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.1% lower after briefly slipping to a fresh four-month low.

“The equity markets are in the midst of pricing in a long-term trade war, with participants shaping their portfolios in anticipation of a protracted conflict,” said Soichiro Monji, senior strategist at Sumitomo Mitsui DS Asset Management.

“The upcoming G20 summit could provide the markets with relief, as the United States and China could use the event to begin negotiating again over trade.”

The G20 meeting is set for June 28-29 in Japan.

Amid the flight-to-safety Germany’s 10-year bond yield fell to a three-year trough of minus 0.179% overnight. A drop below minus 0.200% set in 2016 would take the yield to a record low.

Spanish and Portuguese 10-year yields fell to record lows as deeply negative German Bund yields have encouraged investors to look elsewhere for returns. [GVD/EUR]

Elsewhere, the 10-year U.S. Treasury yield stood at 2.262% after falling to a 20-month low of 2.210% on Wednesday.

Lower Treasury yields not withstanding, the dollar index against a basket of six major currencies was steady at 98.085 and in reach of a two-year peak of 98.371 set last week, with the greenback serving as a safe haven.

The euro was a shade higher at $1.1139, pulling back slightly following three successive days of losses.

The dollar was little changed at 109.530 yen after bouncing back from a two-week low of 109.150 brushed on Wednesday.

Oil prices rose modestly after an industry report showed a decline in U.S. crude inventories that exceeded analyst expectations. [O/R]

The rise followed volatile trading on Wednesday, when oil prices fell to near three-month lows at one point as trade war fears also gripped the commodity markets.

U.S. crude futures were up 0.46% at $59.08 per barrel after brushing $56.88 the previous day, their lowest since March 12.

Brent crude added 0.2% to $69.59 per barrel.

Trade worries have weighed on oil but supply constraints linked to the Organization of the Petroleum Exporting Countries’ output cuts and political tensions in the Middle East have offered some support.