Stocks reel as Canada arrests Huawei CFO over US warrant for breaching Iran trade sanctions

Canadian police have arrested Huawei Technologies Co. Ltd. Chief Financial Officer Wanzhou Meng on a U.S. warrant concerning allegations the Chinese company broke American law in trading with Iran.

The news rocked the stock market, with the Dow Jones Industrial Average falling about 385 points or 1.5 percent in midday trading Thursday. That’s a bit of recovery from a plunge of more than 660 points earlier today. The Nasdaq composite index was faring somewhat better, down a half-percentage point.

Investors fear that the arrest could worsen trade tensions with China. On Tuesday, the previous trading day after a hiatus Wednesday to honor the death of former President George H.W. Bush, the Dow fell nearly 700 points, also chiefly on China trade concerns.

Huawei, which surpassed Apple Inc. to become the world’s second-largest smartphone provider in July, was first targeted by the U.S. Department of Justice in April over its alleged dealings with Iran.

The South China Morning Post reported early Thursday that Meng (pictured), 41, is tipped by some mainland China media as a leading contender to succeed her father, Huawei founder Ren Zhengfei, to take the helm of the telecom giant.

The Chinese government is not happy with the news, saying that the arrest is a breach of human rights obligations.

Huawei confirmed the news, saying in a statement that it has been provided very little information regarding the charges and is not aware of any wrongdoing by Meng. It added that it “complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, U.S. and EU.”

Huawei has long been targeted by U.S. lawmakers over allegations that it is close to the Chinese government and its devices could be used for espionage.

Legislation first proposed in January and subsequently passed

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