* Sterling losses 1% gains as Brexit deal cheers nagged by
doubts
* Lack of support from Northern Irish partners a snag
* Dollar weak as U.S. retail sales fall for first time in 7
months
* Turkish markets in focus before talks with U.S. over Syria
By Marc Jones
LONDON, Oct 17 (Reuters) - Confirmation of a new Brexit deal
sent sterling to a five-month high on Thursday and hoisted
European stocks to a year-and-a-half peak, before familiar
doubts about British parliamentary support for the agreement
hauled them back.
While the British government and the European Union may have
agreed a deal, there is not a clear road ahead. The Irish border
riddle remained a sticking point for Northern Ireland's
Democratic Unionist Party (DUP), which has refused to support
the agreement. That reduces the chances of British Prime Minister Boris
Johnson winning parliamentary ratification for the deal.
Still, after weeks of negotiations, an agreement being
struck was welcomed by British and EU leaders.
"We have a great new Brexit deal," Johnson said.
"Where there is a will, there is a deal - we have one!"
echoed European Commission President Jean-Claude Juncker as the
news broke from Brussels.
Sterling, which has been the key gauge of Brexit sentiment
all along, jumped as much as a 1% against the dollar, putting it
on course for its best six-day gain in more than 30 years before
the doubts and grumbles set it. /FRX However market optimism faltered when the DUP said it could
not support the agreement, torpedoing any hopes of a smooth
passage through parliament.
"These proposals are not, in our view, beneficial to the
economic wellbeing of Northern Ireland and they undermine the
integrity of the union," the party said in a statement.
Having ran up as far as $1.2988 GBP= sterling started to
splutter badly and was back down under $1.28 by the time U.S. FX
trading had started to gain momentum.
It also dropped back from a May high of 0.86 pence against
the euro though the held on to a near- two-month high against
the dollar of $1.1139 EUR= in its sixth day of gains in the
past seven. /FRX
"Clearly we have been here before," said Societe Generale's
Kit Juckes, referring to a divorce deal struck by former British
Prime Minister Theresa May which was repeatedly rejected by
lawmakers. "But if this were to pass I think we would see
euro-sterling the other side of 85 (pence per euro).
London's heavyweight FTSE .FTSE jumped 0.8% as the pound
slid but the pan-European STOXX 600 .STOXX lost most of its
gains. UK Gilts GB10YT=RR , German Bunds DE10YT=RR , the Swiss
franc, gold and most other safe havens also rebounded after
selling off. .EU
TRADE AND TURKEY
It's not all about Brexit.
Wall Street was expected to reopen higher as a strong start
to corporate earnings, thanks to Netflix and Morgan Stanley,
helped offset disappointment over weekly jobless data. .N
Emerging-market stocks .MSCIEF also gained for a sixth day
- their longest winning streak since early April - after U.S.
Treasury Secretary Steven Mnuchin said U.S. and Chinese trade
negotiators were nailing down a Phase 1 trade deal text for
their presidents to sign next month.
But U.S. retail sales fell for the first time in seven
months, suggesting manufacturing-led weakness was spreading to
the broader economy. U.S. consumption has been one of few bright
spots in the global economy, so the data fanned concerns the
trade war would ultimately tip the world into recession.
"While the U.S. suspended a hike in tariffs, it hasn't gone
as far as scrapping the tariffs altogether, so it is hard to
expect a quick pick-up in the economy," said Yoshinori Shigemi,
global market strategist at JPMorgan Asset Management.
The dollar index =USD was last at 97.692, having reached
its lowest level since Aug. 27. The dollar was flat to the
Japanese yen at 108.75 JPY= after peaking at 108.90, and down
against the euro at $1.11 EUR= .
In commodities, oil prices slipped after industry data
showed a larger-than-expected build-up in U.S. crude stockpiles,
adding to concerns that global demand may weaken amid further
signs of an economic slowdown. Brent crude LCOc1 futures fell 0.25% to $59.27 a barrel.
U.S. West Texas Intermediate crude CLc1 lost 0.5% to $53.01.
Turkey's fragile markets remained in focus after the
country's military advance in Syria created tensions with the
United States and Europe and incurred mild sanctions. Turkish
President Tayyip Erdogan is due to meet U.S. Vice President Mike
Pence and Secretary of State Mike Pompeo.
Pence and Pompeo are expected to urge Erdogan to declare a
ceasefire, something Erdogan says will "never" happen. U.S.
President Donald Trump warned of "devastating" sanctions if
discussions did not go well.
Turkish stocks were down 1.2% and the lira weakened to
5.8877 to the dollar TRY= . It has lost nearly 5% this month,
making it the world's worst performer for October.
Turkey's lira worst performing currency over the last month https://tmsnrt.rs/2OLepRJ
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