NEW YORK, United States (AFP) — Global stocks fell Monday as protests across China in opposition to the government’s hardline zero-Covid policy fueled uncertainty about the world’s number-two economy.

Hundreds of people took to the streets in China at the weekend, in a wave of demonstrations not seen since pro-democracy rallies in 1989 were crushed.

China-linked stocks took the brunt of selling in Asia, with Hong Kong’s Hang Seng Index closing down more than one percent and Shanghai off 0.8 percent.

Paris, London and Frankfurt all ended in the red Monday while Wall Street also began a heavy week of economic data releases deeply in negative territory.

After last week’s advance, all three major US indices lost at least 1.5 percent.

“Sentiment has turned sour as unrest across China grows,” said SPI Asset Management’s Stephen Innes.

“Risk of the situation escalating from here and short-term volatility remains high.”

A deadly fire in the Xinjiang region Thursday served as the catalyst for the public anger in China, with many blaming virus lockdowns for hampering rescue efforts.

People have taken to the streets in Beijing, Shanghai, Guangzhou and Chengdu, with many calling for an end to lockdowns after an easing of some measures had fueled hopes of a lighter pandemic approach.

Some demonstrators were even demanding the resignation of President Xi Jinping, who recently secured an unprecedented third term as the country’s leader.

The tightened containment measures were introduced as China battled record-high Covid infections.

Beijing’s zero-Covid policy means the threat of more growth-choking lockdowns, City Index analyst Fawad Razaqzada said in a note.

“This is going to hold back the yuan and Chinese stocks, and potentially risk assets outside of China,” added Razaqzada.

The prospect of a hit to demand in the world’s biggest crude importer also hammered oil prices early in the day. But the commodity later rebounded following a rumor that oil exporters could trim production.

– Eyes on Fed boss –

The weakness “isn’t just about China. The reports out of China have also become a good excuse to take some money off the table following a big run by the market,” Briefing.com analyst Patrick O’Hare said in a note.

The selling has taken a bit out of recent gains across markets, sparked by hopes of a slowdown in the Federal Reserve’s interest rate hikes, with US inflation finally showing signs of softening.

However, some observers said the protests might provide long-term benefits as they could force President Xi to shift away from his strict, economically damaging measures sooner.

Investors are also looking ahead to the release of US jobs data at the end of the week, which could provide clues about the Fed’s next moves, while watching for speeches by central bank boss Jerome Powell and other key policymakers.

– Key figures around 2130 GMT –

New York – Dow: DOWN 1.5 percent at 33,849.46 (close)

New York – S&P 500: DOW 1.5 percent at 3,963.94 (close)

New York – Nasdaq: DOWN 1.6 percent at 11,049.50 (close)

London – FTSE 100: DOWN 0.2 percent at 7,474.02 (close)

Frankfurt – DAX: DOWN 1.1 percent at 14,383.36 (close)

Paris – CAC 40: DOWN 0.7 percent at 6,665.20 (close)

EURO STOXX 50: DOWN 0.7 percent at 3,935.51 (close)

Tokyo – Nikkei 225: DOWN 0.4 percent at 28,162.83 (close)

Hong Kong – Hang Seng Index: DOWN 1.6 percent at 17,297.94 (close)

Shanghai – Composite: DOWN 0.8 percent at 3,078.55 (close)

Euro/dollar: DOWN at $1.0347 from $1.0395 on Friday

Dollar/yen: DOWN at 138.87 yen from 139.19 yen

Pound/dollar: DOWN at $1.1952 from $1.2092

Euro/pound: UP at 86.50 pence from 85.96 pence

West Texas Intermediate: UP 1.3 percent at $77.24 per barrel

Brent North Sea crude: DOWN 0.5 percent at $83.19 per barrel

© Agence France-Presse