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GLOBAL MARKETS-Asian stocks find modest support on firmer U.S. futures

Published 28/08/2019, 02:03
© Reuters.  GLOBAL MARKETS-Asian stocks find modest support on firmer U.S. futures
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4

* Shares stabilise but risks to global economy remain

* Treasury yield curve inversion gets deeper

* Policymakers being forced to support economic growth

By Stanley White

TOKYO, Aug 28 (Reuters) - Asian shares eked out meagre gains

on Wednesday, as higher Wall Street futures provided some relief

for investors after an overnight U.S. selloff, though deeper

worries about the global economy are likely to keep a lid on

sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan

.MIAPJ0000PUS was down 0.03%, Japan's Nikkei .N225 rose

0.04% and Australia's shares rose 0.07%.

The U.S. yield curve inversion deepened on Tuesday to levels

not seen since 2007, which sent Wall Street stocks lower. The

S&P 500 .SPX fell 0.33%.

Gold, which is bought as a safe haven during times of

economic uncertainty, traded close to a six-year high.

"Bonds are rallying and there is limited upside for stocks

right now," said Kiyoshi Ishigane, chief fund manager at

Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.

"But I don't want to give up on equities just yet. The U.S.

Federal Reserve and officials in other countries simply have to

do more to stimulate their economies, which will eventually

prevent the bottom from falling out."

U.S. stock futures ESc1 were 0.14% higher, which helped

ease investors' nerves in Asian trading, but there were still

plenty of reasons to be concerned.

Investors will focus on how Chinese shares open after China

late on Tuesday unveiled measures to boost consumption.

A trade dispute between the United States and China is now

in its second year and is placing increasing strain on the

global economy, forcing policy makers to respond with interest

rate cuts and stimulus measures to bolster growth.

A bond yield curve inverts when long-term yields trade below

short-term yields and is commonly considered a signal of an

impending economic recession.

The yield on benchmark 10-year Treasuries US10YT=RR stood

at 1.4744%, compared with the two-year yield US2YT=RR of

1.5159%. The yield curve inversion is the deepest since May

2007, when the U.S. subprime financial crisis started to unfold.

Yields on 30-year Treasuries stood at 1.9554%, below 3-month

T-bill yields of 1.9951%, which some traders say is an even more

bearish signal.

Spot gold XAU= was unchanged in Asia at $1,542.25 per

ounce, but still close to a six-year high. GOL/

The dollar was little changed at 105.67 yen JPY=EBS after

falling 0.3% on Tuesday.

Investors are also focused on Sept. 1, when the first stage

of U.S. tariffs on $300 billion worth of Chinese goods is

scheduled to go into effect. In response, China has unveiled

tariffs on U.S. products set to go into effect the same day.

U.S. crude CLc1 ticked up 1.17% to $55.57 a barrel,

supported by expectations of a drawdown in U.S. crude

inventories.

(Editing by Sam Holmes)

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