The arrest of Huawei’s chief financial officer Meng Wanzhou has reignited trade tensions between the US and China, with US markets dropping at on Thursday.

Ms Meng was detained in Vancouver on Saturday, and the US is seeking extradition, according to a Canadian Justice Department spokesperson. She was reportedly arrested over violating US sanctions against Iran.

Huawei said in a statement that it “has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms Meng”.

“The company believes the Canadian and US legal systems will ultimately reach a just conclusion,” the group added.

China has criticised the arrest, which could deal a significant blow to the nascent truce called by Donald Trump and Xi Jinping at the G20 summit last week.

However, the deal has appeared to be on shaky ground since that meeting took place – on Tuesday, the US president tweeted that negotiations had started but said if no “real deal” with Beijing could be found he would impose more tariffs. He also called himself “tariff man”.

The Dow Jones fell by more than 400 points, or 1.6 per cent, at the open on Thursday, having been closed on Wednesday to mark the funeral of George HW Bush.

The fallout is also having an impact on European and Asian markets. The FTSE 100 was down 2.17 per cent to a two-year low in early trading.

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Russ Mould, investment director at AJ Bell, said: “Investors are back in risk-off mode with markets falling in the UK, mainland Europe and across Asia. Markets are worried by numerous things: global economic growth, rising interest rates and the US/China trade war.