LONDON (Reuters) – Global stocks retreated for a third straight day on Thursday as investors reduced their optimism over U.S.-Sino trade talks, while an early end to a U.S.-North Korean summit in Vietnam and weak economic data out of China also hit sentiment.

The Japanese yen and the Swiss franc – both safe-haven currencies – gained after the United States and North Korea failed to reach an agreement on denuclearization of the Korean peninsula after two days of meetings.

U.S. President Donald Trump and North Korean leader Kim Jong Un had constructive discussions on denuclearization, the White House said, but news of the summit’s early break-up triggered flight-to-quality bids in safe assets.

Riskier assets took a hit, with stocks across the board lower in Europe after the start of trading. The pan-European STOXX 600 index fell more than half a percent. [.EU]

That followed a retreat in Asian equities, which took a hit on a lack of progress on trade issues between China and the U.S. and data showing factory activity contracting to a three-year low in China. The Shanghai Composite Index fell 0.7 percent.

The data also showed export orders fell at their fastest pace since the global financial crisis, adding to worries about the nearly year-long trade dispute between China and the U.S.

U.S. issues with China are “too serious” to be resolved with promises from Beijing to purchase more U.S. goods, and any deal between the two countries must include a way to ensure commitments are met, U.S. Trade Representative Robert Lighthizer told U.S. lawmakers on Wednesday.

Lighthizer said the office of the United States Trade Representative (USTR) was taking legal steps to implement Trump’s decision on Sunday to delay a tariff increase on more than $200 billion worth of Chinese goods that had been scheduled for Friday.

But USTR later clarified in a statement that it was not abandoning the threat of increasing the tariffs to 25 percent from 10 percent.

“This is likely to be the sort of trade deal that comes through: enough of a deal, or delays of further taxes to enable equities to stay supported while still allowing enough room for U.S. President Trump to criticize China on the campaign trail next year,” said Paul Donovan, chief global economist at UBS Wealth Management.

“In many ways this indefinite delay in the consequences are reminiscent of the deal agreed between Trump and one of the many EU Presidents Juncker last year.”

PULLING BACK

Global equities scaled a four-month high earlier this week helped by upbeat expectations towards U.S.-China trade talks, before pulling back after Lighthizer spoke.

“One suspects trade headlines will continue to throw around sentiment for a while yet. The issues are complex, the trade-offs real, and opinions divided,” ANZ strategists said in a note.

MSCI’s All-Country World Index was 0.2 percent lower on the day and down for a third day running.

Global stock markets in 2019 will at best only recoup losses from the deep sell-off late last year, according to equity market analysts in Reuters polls, who reckon the risk is skewed more toward a sharp fall by mid-year.

In currency markets, the dollar index against a basket of six major currencies fell 0.1 percent at 96.041.

The index had edged up 0.1 percent on Wednesday, pulling away from a three-week trough as Treasury yields rose ahead of the release of U.S. fourth-quarter GDP data later on Thursday.

The dollar dipped 0.2 percent to 110.80 yen.

The yen often attracts demand in times of political tensions and market turmoil. It showed little response to data showing Japan’s factory output posted the biggest decline in a year in January.

The Swiss franc rallied by half a percent against the dollar on Thursday after news of the end of the summit between the U.S. and North Korea.

The euro was 0.1 percent higher at $.1.13815 after slipping 0.15 percent on Wednesday.

Britain’s pound was 0.1 percent lower $1.33.

Sterling has rallied this week as investors ramped up bets that a no-deal Brexit was less likely and that Britain’s departure from the European Union would be delayed.

Goldman Sachs on Thursday joined a growing number of banks and asset managers that reduced their probability of a no-deal Brexit.

Oil prices fell on Thursday amid weakening factory output in China and Japan and record U.S. crude output, although markets remained relatively well supported by supply cuts led by producer club OPEC.

U.S. crude oil futures slipped 0.25 percent to $56.79 per barrel, losing a bit of steam after surging 2.5 percent on Wednesday.

Brent was half a percent lower at $66.03.