San Francisco Frontiers - Stocks retreat as profit-taking follows Wall Street records

Asian markets ended mixed after both the S&P 500 and the Nasdaq hit records, with Shanghai rising but Tokyo sinking more than one percent after Trump threatened more tariffs on Japan in a row over rice and autos.

"The next few days are going to be testing times for governments in many parts of the world as they try to hammer out trade deals with the US," said Dan Coatsworth, an investment analyst at AJ Bell.

While few trade agreements have been reached so far, the week began with some optimism as Canada and the United States agreed to restart trade talks after Ottawa scrapped a digital services tax contested by US tech giants.

Comments from Trump and some of his top officials also suggested the deadline was flexible, and that several pacts were nearly completed.

"We expect risk sentiment to remain shaky until a deal is agreed... investors are on pause for now and are waiting for concrete news before making their next move," said Kathleen Brooks, research director at trading group XTB.

The dollar remained under pressure after its worst start to the year since 1973, with confidence deteriorating amongst many foreign investors since Trump returned to the White House.

The Dollar Index, which compares the greenback to a basket of major currencies, fell 10.8 percent in the first half of the year, its steepest decline since the dollar became the global benchmark currency.

Investors increasingly expect the Federal Reserve to cut rates at least twice this year -- with Trump having loudly criticised Fed chief Jerome Powell for not doing so sooner -- and all eyes will be on US jobs data due this week.

Investors are also keeping an eye on Trump's multitrillion-dollar tax-cutting bill, which is being debated in the Senate.

Trump has urged lawmakers to pass the bill by July 4 -- when Wall Street will be closed for Independence Day -- but its passage remains uncertain over concerns that it will add $3 trillion to US deficits.

For David Morrison at Trade Nation, the dollar's weakness reflects "ongoing concerns over trade, tariffs, national debt and central bank independence".

The Tokyo market drop came after Trump threatened to impose a fresh levy on Japan over a row about the country not buying US rice.

Japan has seen rice prices double over the past year owing to supply issues caused by various factors, piling pressure on Prime Minister Shigeru Ishiba ahead of elections this month.

Trump also hit out at what he considered an unfair balance in the trade in cars between the two countries, and floated the idea of keeping a 25-percent tariff on autos in place.

- Key figures at around 1340 GMT -

New York - Dow: FLAT at 44,109.67

New York - S&P 500: DOWN 0.2 percent at 6,190.18

New York - Nasdaq: DOWN 0.4 percent at 20,280.15

London - FTSE 100: FLAT at 8,759.34 points

Paris - CAC 40: DOWN 0.5 percent at 7,625.88

Frankfurt - DAX: DOWN 0.8 percent at 23,722.89

Tokyo - Nikkei 225: DOWN 1.2 percent at 39,986.33 (close)

Shanghai - Composite: UP 0.4 percent at 3,457.75 (close)

Hong Kong - Hang Seng Index: Closed for holiday

Euro/dollar: UP at $1.1800 from $1.1785 on Monday

Pound/dollar: DOWN at $1.3730 from $1.3732

Dollar/yen: DOWN at 143.24 yen from 143.98 yen

Euro/pound: UP at 85.94 pence from 85.82 pence

Brent North Sea Crude: UP 0.5 percent at $67.04 per barrel

West Texas Intermediate: UP 0.6 percent at $65.47 per barrel

J.Peterson--SFF