(Updates through afternoon U.S. trading)
By David Randall
NEW YORK, Aug 6 (Reuters) - World stock markets were mixed
on Tuesday, with Wall Street making modest gains after China's
central bank stepped in to stabilize the yuan, soothing fears a
protracted trade spat between the U.S. and China would spill
over into a currency war as well.
The small gains in the U.S. and losses in Europe followed a
rout in global markets Monday after the yuan dropped past 7 to
the dollar, spurring the United States to label Beijing a
currency manipulator. Safe-haven assets, including bonds, gold and currencies like
the yen and Swiss franc, dipped as investors moved tentatively
back into the euro, sterling and some emerging-market
currencies. Yet investor sentiment remained fragile.
"I think the tipping point for a more prolonged negative
trend (for risk assets) is quite close," said Hans Peterson, SEB
Investment Management's head of asset allocation.
On Wall Street, the Dow Jones Industrial Average .DJI rose
126.3 points, or 0.49%, to 25,844.04, the S&P 500 .SPX gained
17.15 points, or 0.60%, to 2,861.89 and the Nasdaq Composite
.IXIC added 57.63 points, or 0.75%, to 7,783.67.
The pan-European STOXX 600 index .STOXX lost 0.47% and
MSCI's broad gauge of stocks across the globe .MIWD00000PUS
gained 0.09%.
U.S. President Donald Trump and Treasury Secretary Steven
Mnuchin said on Monday China was manipulating its currency, and
that Washington would engage the International Monetary Fund to
clamp down on Beijing.
"Officially labelling China a currency manipulator gives the
United States a legitimate reason to take even more steps," said
Norihiro Fujito, senior investment strategist at Mitsubishi UFJ
Morgan Stanley Securities.
"The markets are now scrambling to factor in the possibility
of the United States imposing not only an additional 10% of
tariffs on Chinese imports, but the figure being raised to 25%."
Goldman Sachs also said it no longer expects a trade deal to
be struck before the November 2020 U.S. presidential election.
Morgan Stanley said more tit-for-tat tariffs could tip the world
economy into recession by the middle of next year.
Though U.S. Treasury yields had edged back up to 1.74% from
October 2016 lows of 1.672%, German yields stayed down at minus
0.54%. Markets are now pricing in a 100% chance the European
Central Bank will cut its already negative interest rates again
next month. ECBWATCH
China's offshore yuan had stretched the previous day's
slide, briefly weakening to 7.1382 CNH=D4 , the lowest since
international trading in the Chinese currency began in 2010. But
it pulled back to 7.0469 after Beijing's firmer-than-expected
fixing on Tuesday.
The Japanese yen, a perceived safe-haven in times of market
turmoil and political tensions, touched a seven-month high of
105.520 per dollar JPY= before dropping back as far as 106.700
in volatile trade. /FRX
Oil prices rebounded slightly from big falls in recent
sessions, but Brent crude remained near seven-month lows around
$60 a barrel due to escalating trade tensions between China and
the United States. Brent crude oil futures LCOc1 rose 0.3% to
$60.01 per barrel. U.S. crude rose 0.3% to $54.87.
Spot gold XAU= stalled after advancing to a six-year peak
of $1,474.80 an ounce as investors sought safety.
"People are just rebalancing their portfolios in favor of
bonds, gold, Japanese yen, Swiss francs and the usual safe
havens," said SP Angel analyst Sergey Raevskiy.
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Global assets in 2019 http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Global bonds dashboard (DO NOT USE UNTIL UPDATE FOUND) http://tmsnrt.rs/2fPTds0
Emerging markets in 2019 http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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