* S&P 500 closes at record high
* Focus turns to Fed decision
* EU agrees Brexit delay as British parliament blocks Dec
election
* Dollar weak on trade optimism, before Fed meeting
* Gold eases; Treasury yields rise
(Updates to U.S. close of trading)
By Saqib Iqbal Ahmed
NEW YORK, Oct 28 (Reuters) - An index of global stock
markets rallied to a 21-month high on Monday, boosted by growing
hopes for a U.S.-China trade deal and the view that the U.S.
Federal Reserve this week will deliver its third interest rate
cut for 2019.
U.S. Treasury yields rose after the European Union agreed to
a three-month flexible delay of Britain's departure. Improved
risk sentiment also sapped demand for the safe-haven U.S.
dollar, the Japanese yen and gold.
MSCI's All Country World Index .MIWD00000PUS , which tracks
shares across 47 countries, was up 0.44% to its highest intraday
level since Feb. 2, 2018.
U.S. and Chinese officials are "close to finalizing" parts
of a trade agreement after high-level telephone discussions on
Friday, the U.S. Trade Representative's office and China's
Commerce Ministry said. The USTR provided no details on areas of
progress. U.S. President Donald Trump has said he hopes to sign the
deal with China's President Xi Jinping next month at a summit in
Chile.
"It just seems like the things that would disrupt the rally
– tightening monetary policy (are) off the table. Some kind of
big battle with the Chinese seems to be off the table, some kind
of political upheaval seems be off the table," said Stephen
Massocca, senior vice president at Wedbush Securities in San
Francisco.
"All of that means the line of least resistance is higher."
Strong results from U.S. companies have boosted risk
sentiment, and investors are hopeful the Fed will cut interest
rates at its meeting this week.
On Wall Street, the S&P 500 closed at a record high.
Microsoft Corp MSFT.O shares boosted all three main indexes,
after the tech giant beat Amazon.com Inc AMZN.O for the
Pentagon's $10 billion cloud computing contract. The Dow Jones Industrial Average .DJI rose 132.66 points,
or 0.49%, to close at 27,090.72, the S&P 500 .SPX gained 16.87
points, or 0.56%, to finish at 3,039.42 and the Nasdaq Composite
.IXIC added 82.87 points, or 1.01%, to end at 8,325.99.
The pan-European STOXX 600 index .STOXX rose 0.25% to
close at its highest since January 2018, helped by trade-exposed
auto and mining stocks.
In currency markets, the U.S. dollar slipped as trade deal
optimism reduced demand for safe haven currencies.
"Positive trade headlines continue to support our view that
trade tensions are easing," said Win Thin, global head of FX
strategy at Brown Brothers Harriman.
The dollar index .DXY , which measures the greenback
against a basket of six major currencies was 0.09% lower on the
Sterling GBP= rose 0.25% after British lawmakers rejected
Prime Minister Boris Johnson's bid to end the political
paralysis around Brexit with a Dec. 12 election. The vote took place after the European Union agreed to a
three-month flexible Brexit delay.
The benchmark 10-year U.S. Treasury yield US10YT=RR was
last up 4.5 basis points to 1.8455%. Oil prices eased after four days of gains as worries about
weak Chinese industrial data offset hopes oil demand will rise
on a Sino-American trade deal. Brent crude LCOc1 settled down 45 cents, or 0.7% at $61.57
a barrel, while U.S. West Texas Intermediate crude CLc1
settled 85 cents, or 1.5%, lower at $55.81.
Gold slipped as trade hopes limited gains after the precious
metal jumped 1% in the previous session. Spot gold XAU= was
down 0.77% at $1,492.6949 per ounce.
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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