* Asian stock markets : tmsnrt.rs/2zpUAr4
* Shanghai shares skid as Trump targets Huawei, Europe lower
* Asia index ex-Japan hits 15-week trough
* Yen edges higher as mood turns risk averse
* Bitcoin suddenly tumbles, then claws back losses
* Oil waits for OPEC+ output signals
* World FX rates in 2019 tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, May 17 (Reuters) - World share markets suffered a fresh bout of selling on Friday after tough words on trade from China, while bets on a new pro-Brexit leader in Britain sent the pound sliding to its worst week in well over a year.
European stocks and Wall Street futures both slipped more than 0.7%, though that seemed a relatively minor blip after the losses in Asia.
Shanghai finished 2.5% in the red and the yuan hit its weakest in nearly five months, amid growing fallout from President Donald Trump's move to block China's Huawei from buying vital American technology.
The foreboding grew further as the Communist Party's People's Daily used a front page commentary on Friday to evoke the patriotic spirit of past conflicts, saying the trade war would never bring China down.
In terms of how the trade conflict plays out, "the next fortnight will be very, very important," UniCredit strategist Kiran Kowshik said.
"Chinese counter-tariffs are due on June 1 and if those get effective, I think markets will price in the risk of the U.S. imposing its additional $300 billion of tariffs ahead of the G20 meeting (near the end of June)."
The drop in the yuan saw it ease past 6.94 per dollar in the offshore market for the first time since November 2018.
Its slide has been steepening in recent days causing worries about how far it could go. Sources in China told Reuters the central bank would intervene to ensure it did not weaken past 7 to the dollar in the near term.
"Breaking 7 is beneficial to China because it can reduce some of the effects of tariff increases, but the impact on our renminbi confidence is negative and funds will flow out," one of the sources said.
Rattled by the tensions, MSCI's broadest index of Asia-Pacific shares outside Japan sank to a 15-week low and closed down 2.6% for the week.
Japan's Nikkei did manage to bounce 0.9% and the main Australian index climbed to an 11-year peak as higher commodity prices boosted miners. Germany's exporter-heavy DAX fell the most in Europe, with carmaker stocks down as much as 2.1%.
Wall Street looked set for its first drop in four days. Sentiment had been soothed on Thursday by better U.S. economic news, with housing starts surprisingly strong and a welcome pickup in the Philadelphia Federal Reserve's manufacturing survey.
Upbeat results from Walmart burnished the outlook for retail spending, though the chain also warned that tariffs would raise prices for U.S. consumers.
As the earnings season winds down, of the 457 S&P 500 companies reporting about 75% have beaten profit expectations, according to Refinitiv data.
The chillier trade winds helped Treasuries, with the 10-year yield down at 2.38% after a second strong week running for bond markets.
Germany's Bund yields also fell back towards 2-1/2 year lows. French and Spanish yields were set for their biggest weekly drop in two months too.
"Bond markets in general, especially (German) Bunds, are telling us they don't see many good things going on in the next one-two years," said Neil Dwane portfolio manager and global strategist at Allianz Global Investors.
The dollar lost a little of its shine against the safe-haven yen to stand at 109.60 from a top of 110.03. Against a basket of currencies, it was a shade firmer at 96.941.
Yet the euro could make no ground and held at $1.1162 , down 0.5% for the week so far.
Sterling was one of the worst performers as Britain's Prime Minister Theresa May battled to keep her Brexit deal, and her premiership, intact amid growing fears of a disorderly departure from the European Union.
The pound touched a four-month low of $1.2735 and was down 1.9% for the week, which is the biggest drop since February 2018.
Also under pressure was the Australian dollar, losing 1.5% for the week to $0.6880 as investors piled into bets that interest rates would be cut in June.
Cyber currency Bitcoin tumbled over 20% at one stage for no clear reason. It was last down 7%, albeit back on course for its third week of gains and having doubled in value this year.
In commodity markets, spot gold steadied at $1,287 per ounce as risk sentiment soured.
Oil futures firmed into a fourth session as rising tensions in the Middle East stoked fears of potential supply disruptions.
U.S. crude was last up 33 cents at $63.20 a barrel, while Brent crude futures rose 19 cents to $72.81.
The Organization of the Petroleum Exporting Countries and other producers will meet in Saudi Arabia this weekend to discuss whether to continue with supply cuts that have boosted prices more than 30% so far this year.
Editing by John Stonestreet and Gareth Jones