* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei off 0.4% in thin trade, China markets flat
* U.S. retail sales strong, but market still set on Fed cut
* Dollar gains as sterling stricken by hard-Brexit fears
* Oil prices nurse losses on supply data, mixed messages on
Iran
By Wayne Cole
SYDNEY, July 17 (Reuters) - Asian shares drifted off on
Wednesday as anxious investors awaited more earnings reports
from corporate America, while the dollar held firm in the wake
of robust U.S. retail data and a Brexit-driven dive in the
pound.
Oil prices also nursed losses on hints U.S. tensions with
Iran could be easing and as data showed stockpiles fell by less
than expected last week. Not helping the mood was Tuesday's threat from U.S.
President Donald Trump to put tariffs on another $325 billion of
Chinese goods, amid market nervousness over when face-to-face
talks will resume. The fallout of the year-long trade dispute was apparent in
data from Singapore, where exports sank by the most in six years
in June led by a steep drop in electronics. In stock markets trade was generally muted with MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS off 0.25%.
Japan's Nikkei .N225 eased 0.3% and South Korea .KS11
1%, while Chinese blue chips .CSI300 edged up 0.3%. E-Mini
futures for the S&P 500 ESc1 were a fraction firmer but
EUROSTOXX 50 futures STXEc1 dipped 0.2%.
A surprisingly strong reading on U.S. retail sales released
overnight had outweighed weakness in industrial production for
the June quarter and boosted the dollar. Yet, it barely budged market wagers on a Federal Reserve
rate cut this month, with Chicago Fed President Charles Evans
touting 50 basis points of easing. Futures FEDWATCH are 100% priced for a cut of 25 basis
points, and imply a 25% chance of 50 basis points.
"We do not expect these solid (retail) results to impact the
Fed's decision to cut rates at the end of the month," said
Michelle Girard, chief U.S. economist at NatWest Markets.
"The Fed knows the U.S. consumer is strong; policymakers are
worried about the downside risks associated with global growth
and weak manufacturing/business investment, which is why they
believe a rate cut is appropriate."
Analysts at Barclays were even more dovish, arguing
persistent uncertainty and soft inflation warranted
quarter-point cuts in July, September, and December.
STERLING STRICKEN
Expectations of policy stimulus, and the resulting drop in
bond yields, helped counter concerns about corporate profits.
JPMorgan Chase & Co JPM.N and Wells Fargo & Co WFC.N
beat quarterly profit estimates but reported weaker net interest
income. Bank of America and Netflix report on Wednesday.
The Dow .DJI eased 0.09% on Tuesday, while the S&P 500
.SPX lost 0.34% and the Nasdaq .IXIC 0.43%. .N
In currency markets, sterling was the star for all the wrong
reasons. It slid 0.9% overnight to 27-month lows amid fears the
UK could tumble out of the European Union with no trade deal to
soften the blow. GBP/
The pound was last at $1.2414 GBP=D3 , a big come-down from
its March peaks of $1.3383.
The dollar was a major beneficiary at 97.323 .DXY on a
basket of currencies, having risen 0.5% overnight. The euro
settled at $1.1214 EUR= , after a loss of 0.4% on Tuesday,
while the dollar held at 108.20 yen JPY= .
The dollar's gains tarnished gold a little, with the
precious metal easing to $1,404.40 per ounce XAU= from a high
above $1,418 on Tuesday.
Oil prices were trying to stabilise after falling more than
3% overnight. Brent crude LCOc1 futures edged up 18 cents to
$64.49, while U.S. crude CLc1 rose 2 cents to $57.64 a barrel.
O/R
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(Editing by Kim Coghill and Jacqueline Wong)