Japan records surprise trade deficit in July as exports weaken further
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei bounces 0.5% in cautious trading
* Oil retreats on doubts Iran would disrupt supplies
* Yen pulls back, but gold holds most of its gains
By Wayne Cole
SYDNEY, Jan 7 (Reuters) - Asian shares rebounded on Tuesday
as a day passed without a new escalation in the Middle East and
Wall Street erased early losses to end in the black as tech
stocks climbed.
Oil surrendered some hefty gains as many doubted Iran would
strike back in a way that would disrupt supplies, and its own
crude exports. O/R
Brent crude LCOc1 futures stood at $68.91 a barrel, having
been as high as $70.74 at one stage, while U.S. crude CLc1
fell 32 cents to $62.95.
Gold XAU= held firm at $1,563.50, after scaling a near
seven-year peak of $1,579.72 overnight.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS added 0.3%, after a 0.7% drop the previous
session. Japan's Nikkei .N225 edged up 0.5% and South Korea
.KS11 0.6%.
E-Mini futures for the S&P 500 ESc1 held steady.
Shares had fallen sharply on Monday as Iran and the United
States traded threats after an U.S. air strike killed a top
Iranian commander.
The mood calmed a little as the session passed with no new
aggression.
Instead there was much confusion when the U.S, military
wrote to Iraq on Monday saying it would pull out of the country,
a letter seen by Reuters showed. Yet U.S. Defense Secretary Mark Esper told Pentagon
reporters that no decision had been made and the military said
the letter was only a poorly worded draft. Wall Street chose to hope for the best and the Dow .DJI
rose 0.24%, while the S&P 500 .SPX gained 0.35% and the Nasdaq
.IXIC 0.56%.
Surveys of service sectors out overnight showed some
improvement in the United States, UK and EU, stirring
speculation the closely-watched ISM measure of U.S. services due
later Tuesday will also show strength.
"We think the longest US expansion on record still has
plenty of legs," said Tom Porcelli, chief U.S. economist at RBC
Capital Markets. "To be sure, Iran adds an additional layer of
complexity."
"But while the risk of conflict has increased, the reality
is this is likely to be limited to proxy skirmishes," he argued.
"The risk of a "hot" conflict seems low as Iran is unlikely to
respond in such a way that risks a significant escalation from
the United States."
The calmer mood saw the yen lose much of its safe-haven
gains, with the dollar bouncing to 108.37 yen JPY= from a low
of 107.75 hit on Monday.
The euro edged up to $1.1195 EUR= , but faces stiff chart
resistance around $1.1240, while sterling made gains to $1.3170
GBP= on better economic data at home.
Against a basket of currencies, the dollar had drifted off
to 97.618 .DXY but stayed above the recent six-month trough of
96.355.
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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(Editing by Shri Navaratnam)