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GLOBAL MARKETS-Dollar, stocks slide on Trump tweets, dour PMI data

Published 02/12/2019, 17:52
Updated 02/12/2019, 17:55
© Reuters.  GLOBAL MARKETS-Dollar, stocks slide on Trump tweets, dour PMI data
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(Adds U.S. market open, byline, dateline; previous LONDON)

* Trump trade tweets halt recent stock market rally

* Oil prices climb before possible OPEC cuts

* Govt bond yields rise after surprise German SPD elections

By Herbert Lash

NEW YORK, Dec 2 (Reuters) - The dollar and global stock

markets retreated on Monday after U.S. President Donald Trump

said he would restore tariffs on some imports from Brazil and

Argentina, overshadowing data that showed the Chinese and euro

zone economies were stabilizing.

Stocks slid further on data from the Institute for Supply

Management (ISM) showing the U.S. manufacturing sector

contracted for a fourth straight month in November as new orders

slid to around their lowest level since 2012.

A World Trade Organization ruling that the European Union

continues to provide unfair subsidies to European planemaker

Airbus AIR.PA , which supports the U.S. case for retaliatory

tariffs, also weighed on European equities. Germany's export-sensitive DAX .GDAXI stock index tumbled

1.9%, its worst single-day decline since early October, when the

WTO approved U.S. moves to slap import tariffs on $7.5 billion

worth of European goods.

MSCI's gauge of stocks across the globe .MIWD00000PUS shed

0.52%, while the pan-European STOXX 600 index .STOXX lost

1.56%.

Trump's tweets triggered selling that accelerated on last

month's below-expectations U.S. manufacturing activity, said

Fawad Razaqzada, market analyst at Forex.com in London.

"It's a number of reasons coming in all at the same time,"

Razaqzada said. "But with the stock markets at record high

levels, this is always going to happen. Markets go up in stairs

and then on the way down, it's an elevator."

The major U.S. indexes last week hit record highs and MSCI's

index of equity markets in 49 countries was one point below an

all-time high established in January 2018.

The Dow Jones Industrial Average .DJI fell 213.54 points,

or 0.76%, to 27,837.87, the S&P 500 .SPX lost 22.75 points, or

0.72%, to 3,118.23 and the Nasdaq Composite .IXIC dropped

96.44 points, or 1.11%, to 8,569.03.

ISM said its index of U.S. factory activity dropped 0.2

point to a reading of 48.1 in November. A reading below 50

indicates contraction in factory output, which accounts for 11%

of the U.S. economy. The index needs to break below 42.9 to

signal a recession. The dollar dropped from six-month highs against the Japanese

yen and slid to a two-week trough versus the euro after the U.S.

manufacturing report.

The dollar index .DXY fell 0.42%, with the euro EUR= up

0.6% to $1.1081. The yen JPY= strengthened 0.46% versus the

greenback at 109.08 per dollar.

Market enthusiasm that has pushed U.S. stocks to record

levels was predicated on a recovery and Monday's data belied

that trend, said Jack Ablin, chief investment officer at Cresset

Capital Management in Chicago.

Looking at holiday sales, "there's going to be plenty of

good news to go around," Ablin said. "We could get some really

solid news to carry this market at least for the next week or

so," he said.

Commerce Department report that showed U.S. construction

spending unexpectedly fell in October as investment in private

projects tumbled to its lowest level in three years also weighed

on markets. Benchmark 10-year U.S. Treasury notes US10YT=RR fell

15/32 in price to yields up to 1.8258%.

Oil jumped above $61 a barrel, supported by hints that the

Organization of the Petroleum Exporting Countries and its allies

may agree to deepen output cuts at a meeting this week and as

rising Chinese manufacturing activity suggested stronger demand.

U.S. crude CLcv1 rose 1.65% to $56.08 a barrel and Brent

LCOcv1 gained 78 cents to $61.27.

Germany's borrowing costs rose after the Social Democrats

(SPD) chose new leaders critical of their own ruling coalition,

with yields on benchmark 10-year debt set for the biggest

one-day spike in nearly three months.

Benchmark German bond yields jumped across the board, with

10-year yields DE10YT=RR up more than 7 basis points to

-0.273%, their highest in nearly three weeks.

MSCI world stocks index https://tmsnrt.rs/2qVb6hu

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