European shares dip as Chinese trade data disappoints, lira plunges to record low

European stock markets dipped on Wednesday and the U.S. dollar nudged higher as weak Chinese trade data had investors fretting about softening global demand, with attention turning towards next week's pivotal inflation data and Federal Reserve meeting.

Meanwhile, Turkey's lira plunged to a record low against the greenback as authorities appeared to loosen stabilising measures after the government signalled a pivot to more orthodox policies.

The pan-European benchmark STOXX 600 SXXP was last down 0.2%. Germany's DAX DAX, France's CAC 40 PX1 and Britain's FTSE 100 UK100 were lower by 0.1%-0.4%.

Spanish stocks IBC outperformed after shares in the world's biggest fast fashion company Inditex ITX jumped 5.8% following first quarter results.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gained 0.5%, led by gains in Hong Kong HSI and Taiwan TAIEX, while Japan's Nikkei 225 NI225 fell 1.8%, its sharpest fall in 12 weeks to snap a four-day winning streak.

Chinese exports shrank much faster than expected in May and imports fell, albeit at a slower pace, as manufacturers struggled to find demand abroad and domestic consumption remained sluggish.

"The Chinese trade data is the latest indicator that tells you there's nothing good going on in global demand," said Ben Laidler, global markets strategist at eToro.

"There's a huge gulf in the global economy between services and manufacturing. This is a warning sign that global growth will slow from here. The question is how much," Laidler added.

Wall Street futures were slightly lower after the S&P 500 SPX gained 0.2% on Tuesday, gaining support from strengthening bets that the Federal Reserve will hold interest rates steady at its policy meeting next week.

The CBOE's VIX volatility gauge VIX closed below 14 on Tuesday, its lowest such close since February 2020.

"The drivers behind the moves higher in equities have been there," eToro's Laidler said, noting the debt ceiling deal and evidence deposits have been returning to the U.S. banking system.

"That's given markets a little bit of room to run ahead of a U.S. inflation and the Fed meeting next week," he added.

The two-year Treasury yield (US2YT=RR), which typically moves in step with interest rate expectations, fell slightly to about 4.5124% in London. The yield on 10-year notes US10Y slipped to around 3.687%.

The U.S. dollar DXY gained 0.1% against a basket of currencies, while the Turkish lira USDTRY weakened over 7% to a record low of 23.16 per dollar, its biggest one-day sell-off since the 2021 crash.

"It looks like the central bank's efforts to fight a stronger dollar is either fading – after Erdogan's victory in the latest elections – or keeping the lira steady is becoming more difficult and increasingly expensive," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Oil extended losses on Wednesday as concern over global economic headwinds deepened, erasing gains booked after top crude exporter Saudi Arabia's surprise weekend pledge to deepen output cuts.

Brent crude futures BRN1! were down 50 cents, or 0.6%, at $75.78 a barrel. The U.S. West Texas Intermediate crude futures CL1! fell 51 cents, or 0.7%, to $71.27 a barrel.

Gold GOLD was slightly lower, trading at $1,958 per ounce.

Leading cryptocurrency bitcoin BTCUSD was trading at about $26,800, consolidating after a sharp rebound on Tuesday from as low as $25,350.

The token has been a paradoxical beneficiary of a U.S. Securities and Exchange Commission (SEC) crackdown on cryptocurrency exchanges, and the classification of tokens including Solana, Cardano and Polygon as securities.