The Australian share market lost ground, after China retaliated against US tariffs, which led to a global sell-off overnight.

Key points: Australian market was weighed down by escalating US-China tensions

Australian market was weighed down by escalating US-China tensions Nearly every stock on the ASX 200 is trading lower, except for gold miners

Nearly every stock on the ASX 200 is trading lower, except for gold miners Dow Jones index plunged 617 points overnight

At the close the ASX 200 index had lost 0.9 per cent to 6,240.

The benchmark index had fallen as much as 1.5 per cent at its lowest point on Tuesday morning.

Every sector was in the red, with technology (-1.5pc), financials (-1.5pc), consumer cyclicals (-1.4pc) and energy (-1.5pc) being the worst performers.

Mayne Pharma Group shares plunged to a four-year low, down 15 per cent by the close at 56.5 cents. This was after the pharmaceutical firm reported that revenue earned from its generic products segment dropped 32 per cent to $88.9 million.

National Australia Bank fell 4.7 per cent, mainly because its shares were trading ex-dividend. Essentially, this meant investors who bought NAB shares from today on are not entitled to receive the bank's next upcoming dividend payment.

However, gold miners were the main exception to the falls — with Evolution Mining (+7.8pc), Saracen Mineral Holdings (+3.9pc) and Regis Resources (+5.7pc) all gaining strongly.

Market snapshot at 1:52pm (AEST): ASX 200 -1pc at 6,236

ASX 200 -1pc at 6,236 AUD: 69.55 US cents, 53.64 British pence, 61.89 euro cents, 76.09 Japanese yen, $NZ1.06

AUD: 69.55 US cents, 53.64 British pence, 61.89 euro cents, 76.09 Japanese yen, $NZ1.06 US: Dow Jones -2.4pc at 25,325, S&P 500 -2.4pc at 2,812, Nasdaq -3.4pc at 7,647

US: Dow Jones -2.4pc at 25,325, S&P 500 -2.4pc at 2,812, Nasdaq -3.4pc at 7,647 Europe: FTSE 100 -0.6pc at 7,164, DAX -1.5pc 11,877, CAC -1.2pc at 5,263, Euro Stoxx 50 -1.2pc at 3,321

Europe: FTSE 100 -0.6pc at 7,164, DAX -1.5pc 11,877, CAC -1.2pc at 5,263, Euro Stoxx 50 -1.2pc at 3,321 Commodities: Brent crude -1pc at $US69.98/barrel, spot gold +1.1pc at $US1,300.87/ounce

As investors fled from risky investments, the price of spot gold jumped 1.1 per cent to $US1,299.72 an ounce — its biggest rise in almost three months.

Fortescue Metals Group also surged 7.4 per cent after announcing a 60-cent fully-franked dividend payment.

The Australian dollar was down at 69.4 US cents and its fall may be a factor cushioning local shares from steeper declines.

US markets dive on worsening trade war

Investors are increasingly concerned that a prolonged US-China trade war — and hundreds of billions of dollars worth of tit-for-tat tariffs — will have spillover effects and lead to a global economic slowdown.

The finance ministry of China said it would set import tariffs, of up to 25 per cent, on $US60 billion worth of American goods, taking effect on June 1.

It was Beijing's latest act of retaliation in the trade war launched last year by US President Donald Trump. On Friday, the US increased tariffs from 10 per cent to 25 per cent for $US200 billion worth of Chinese imports.

Mr Trump also ordered his trade chief to begin the process of imposing tariffs on all remaining imports from China.

The US President had earlier warned China not to intensify their trade dispute.

"China should not retaliate — will only get worse," he said on Twitter.

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Wall Street suffered its worst trading day since early-January, with the industrial-skewed Dow Jones plunging 617 points overnight.

The Dow has lost about 1,200 points over the last week, since US President Donald Trump announced his threat of further tariffs against China's imports.

Meanwhile, the benchmark S&P 500 lost 2.4 per cent, and the tech-heavy Nasdaq plummeted by an even steeper 3.4 per cent.

"These 'events' are mostly about markets reacting, fearing the worst and starting to put that into prices," said Commonwealth Bank agri commodity specialist Tobin Gorey.

"Politics out of control is always a problem for asset values.

"We take comfort that, despite the further tit-for-tweet, the two are still talking to one another."

Despite the latest escalation, Mr Trump expects to meet China's President Xi Jinping in Japan, at a G20 summit scheduled for late June.

"Maybe something will happen," Mr Trump said in remarks at the White House.

"We're going to be meeting, as you know, at the G20 in Japan and that'll be, I think, probably a very fruitful meeting."

Commodity price fallout

Another immediate impact of the heightened trade tensions was a slump in the price of Chinese steel futures.

The most active contract for rebar steel fell 1.7 per cent in early morning trade, while hot rolled coil futures dropped 1.6 per cent.

That left rebar steel (used in reinforced concrete in the construction sector) and HRC steel (the mainstay of the car-making and home appliance industries) futures at two-month lows.

Iron ore prices were supported by ongoing supply disruptions and the loss of around 6 per cent of the seaborne market due to mine closures in Brazil.

Despite the decline in steel prices, iron ore futures on the Dalian exchange rose 1.7 per cent to be just under $US97 a tonne.

"Increasing tariffs on each other's imports will definitely impact on economic growth of both countries, while a deal to settle their disputes seems very elusive, " Helen Lau, an analyst at Argonaut Securities in Hong Kong told Reuters.

"It's a little bit easy to understand why iron ore remains supported. No matter what the situation is, China will still need iron ore, but we know there is a supply deficit."