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GLOBAL MARKETS-Asian shares up as trade optimism lingers, oil firm on OPEC+ output cut

Published 06/12/2019, 07:19
Updated 06/12/2019, 07:27
© Reuters.  GLOBAL MARKETS-Asian shares up as trade optimism lingers, oil firm on OPEC+ output cut
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* Trump still upbeat on deal with China despite gap over

tariffs

* Oil prices hold at recent highs as OPEC+ deepens cuts

* Investors eye U.S. jobs data, Fed meeting and tariff

deadline

* European shares set to open a tad higher

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tomo Uetake and Hideyuki Sano

SYDNEY/TOKYO, Dec 6 (Reuters) - Asian stocks gained on

Friday as investors took heart from U.S. President Donald Trump

saying trade talks with China were "moving right along", and

U.S. oil prices sat near 2-1/2-month highs after OPEC and other

producers agreed to cut output.

European shares were expected to follow suit, with major

European stock futures STXEc1 FDXc1 FFIc1 trading up

around 0.2%.

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

.MIAPJ0000PUS was up 0.4% and Japan's Nikkei .N225 added

0.2%.

Australian shares .AXJO rose 0.4% and South Korea's Kospi

.KS11 climbed 0.9%, while Hong Kong's Hang Seng .HSI gaining

0.7%.

Trump's upbeat tone in comments on Thursday was enough to

spark buying, despite a lack of agreement between Washington and

Beijing over whether existing tariffs should be dropped as part

of a preliminary deal to end their trade war. "Many players have taken a wait-and-see attitude given a

lack of fresh trading cues ahead of U.S. payrolls data and other

key events. But clearly, the mood is modestly positive," said

Yasuo Sakuma, chief investment officer at Libra Investments.

Investors were hoping the two sides will reach a compromise

to at least avoid their worst fears - that the United States

will go ahead with its final batch of tariffs on about $156

billion of Chinese exports.

Uncertainties over a deal have pushed some investors to the

sidelines in recent sessions, while nervousness before the

release of U.S. non-farm payrolls data later in the day could

also curb market liquidity.

Investors were also looking ahead to a Fed policy meeting on

Dec. 1-11 as well as a looming Dec. 15 deadline for imposition

of further U.S. tariffs on Chinese goods. A Reuters poll of

economists and analysts showed the Fed would keep rates on hold

at 1.50-1.75%. Libra's Sakuma said the market will likely remain quite

resilient as investors have already taken precautions against a

possible slide in stocks by buying put options.

The one-month moving average for the put-to-call ratio of

open contracts on the S&P 500 .SPX was at 2.2, well above its

level ahead of previous sell-offs, data from options analytics

firm Trade Alert show. The put-to-call ratio of Japan's Nikkei stood at 2.0, its

highest level on record, according to Refinitiv data, which

dates back to June 2012.

A higher ratio reflects greater demand for puts, which are

often used to hedge against a decline in shares.

Oil prices retreated but hovered near recent peaks after

major oil exporting countries agreed on Thursday to cut output

by an extra 500,000 barrels per day in the first quarter of

2020, after a nearly six-hour meeting on Thursday.

Details of the agreement and how the cuts will be

distributed among producers still need to be ratified at a

meeting in Vienna of OPEC and non-OPEC nations, otherwise known

as OPEC+, on Friday.

"The cut of an extra 500,000 barrels a day was not priced

into the market, so the cut will be positive for the market if

it is carried out," said Tatsufumi Okoshi, senior commodity

economist at Nomura.

"But since OPEC countries haven't fully complied with the

existing cut, markets will probably have to wait to see how the

cut will pan out," he added.

Brent crude LCOc1 futures dipped 0.4% to $63.14 a barrel,

having struck its highest on Thursday since Nov. 28, while U.S.

West Texas Intermediate (WTI) crude CLc1 eased 0.3% to $58.24

per barrel, still not far off Thursday's 2-1/2-month high of

$59.12.

The agreement coincided with the initial public offering

(IPO) of state oil firm Saudi Aramco, which was priced at the

top of its range, raising $25.6 billion in the world's biggest

IPO. In the currency market, the British pound soared on growing

confidence that next week's election will give the Conservative

Party the parliamentary majority it needs to deliver Brexit,

ending near-term uncertainty. Sterling spiked to a seven-month high of $1.3166 on Thursday

and last stood at $1.316 GBP=D4 , up 1.6% so far this week. It

hit 2-1/2-year highs versus the euro EURGBP= .

The euro stood at $1.1107 EUR= , near a one-month high of

$1.11165 set on Wednesday, lifted by firmer euro zone economic

data.

That helped push the dollar against a basket of major

currencies =USD to a one-month low of 97.356 on Thursday. The

index was last quoted at 97.379.

Against the yen, the dollar traded at 108.67 yen JPY= ,

having slipped slightly the previous day.

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