LONDON - Global shares skidded further from five-month peaks on Friday as a bounce back in European business activity did little to ease the jitters surrounding Sino-US tensions, while gold approached a record high.

“An escalation in US-China tensions that could have hugely negative consequences on stock market leadership, particularly around the US tech giants, is worrying,” said Stephen Innes, Chief Global Market Strategist at AxiCorp.

Chinese blue chips led the declines, retreating 4.4 percent, wiping out a week of gains.

European shares were on course for their worst day in a month, with the pan-region Euro Stoxx 50 down 1.3 percent.

Technology stocks led losses, following their US peers overnight.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.8 percent. Tokyo was closed for a holiday, but Nikkei futures were trading 0.4 percent lower.

E-Mini futures for the S&P 500 edged down 0.2 percent.

Investors took some comfort from flash Composite Purchasing Managers’ Index (PMI) data which showed euro zone business activity bounced back to growth in July as more parts of the economy that were locked down to curtail the spread of the coronavirus reopened.

British businesses experienced the fastest upturn in five years during July and data for the United States will follow later in the day.

The market’s dogged optimism on economic recovery had been challenged on Thursday by data showing the number of Americans filing for unemployment benefits unexpectedly rose last week for the first time in nearly four months.

The euro was at US$1.15880 , close to its highest level since October 2018, having enjoyed a winning streak for all of July, as the European Union’s passing of a 750 billion-euro recovery fund restored confidence.

The yen was up 0.5 percent at 106.33 , earlier touching its highest since June 23.

The Chinese yuan looks set for its worst week since mid May. It was down 0.2 percent at 7.0235 per dollar in the offshore market.

In fixed income, Italy’s bond market was poised for its best week in two months. Although Italy’s 10-year bond yield rose 4 basis points to 1.09 percent, it was still holding near Thursday’s low around 1.04 percent.

Safe-haven German bond yields also rose from two-month lows after the stronger-than-forecast euro zone PMI data.

The combination of super-loose money and negative real bond yields has burnished the attractiveness of gold, which pays no yield but is supply constrained.

The precious metal was last at US$1,892.32 an ounce for its biggest weekly gain in four months as it held firm near a nine-year high. That put it within striking distance of the all-time peak at US$1,920.

Analysts at RBC Capital Markets noted gold-backed exchange traded product holdings had already reached record peaks.

“The level of COVID-19 uncertainty, low and negative real and nominal rates, politics and geopolitics have driven gold prices sharply higher, and pushed allocations among investors ever higher,” they said in a note.

Supported by a weaker dollar, oil prices nudged higher.

Brent crude was up 0.4 percent at US$43.48 a barrel, while US West Texas Intermediate (WTI) crude was up 0.5 percent at US$41.26.