* German manufacturing dip eases
* Gold holds near 8-year peak
* Oil prices firm
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Tom Arnold
LONDON, July 1 (Reuters) - Global stocks struggled for
momentum on Wednesday as improving economic data was offset by
concern that surging coronavirus cases in the United States
could derail the world's recovery before it properly begins.
Germany's manufacturing sector contracted at a slower pace
in June, while French factory activity rebounded into growth,
data showed. German retail sales rose sharply in May, reflecting a
rebound in private consumption, while a recovery in China's
factory activity offered further signs that the world's second
largest economy may have passed the worst of the devastation
caused by the pandemic. Germany's jobless rate rose by 69,000 in June, far less than
expected. Economic institute Ifo said Europe's largest economy
will gradually recover after the slump caused by the pandemic
and will likely return to last year's level at the end of 2021.
Coronavirus cases surged, with the United States recording
47,000 infections on Tuesday, its biggest single-day spike since
the pandemic began. MSCI's world shares index .MIWD00000PUS was 0.1% higher
after rising 18% for its biggest three-month gain since 2009 in
the second quarter, but it still closed the first half around 8%
lower from where it started the year.
After their best quarter since March 2015, European stocks
opened firmer, with the broader Euro STOXX 600 .STOXX gaining
0.3%.
"We are at the beginning of the quarter but it doesn't look
very different from where we left the last one," said François
Savary, chief investment officer at Swiss wealth manager Prime
Partners, predicting "a further consolidation over the summer."
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.3%, led by gains in China .CSI300 .
E-Mini futures for the S&P 500 ESc1 were down 0.2%.
It followed a strong finish to the quarter on Wall Street
but also a loss of momentum in recent weeks as U.S. infection
rates have surged, with some states reimposing restrictions on
business and personal activity.
The S&P 500 .SPX index rose 1.5% for an almost 20% gain
over the past three months, fuelled by unprecedented central
bank stimulus and hopes for a swift pandemic recovery, but it
rose only 1.8% in June.
Coronavirus cases more than doubled in 14 U.S. states last
month, a Reuters analysis showed, and fears are growing that the
caseload could prompt fresh lockdowns. "The rise in COVID-19 infections is now triggering a
reversal on the reopening strategy," said Rodrigo Catril, senior
FX strategist at National Australia Bank in Sydney. "It remains
to be seen if the U.S economy will continue to surprise over the
coming month."
The U.S. government bond market remains in a cautious mood.
Yields on benchmark 10-year government debt US10YT=RR rose
overnight to 0.6774%, but finished the quarter steady.
In Europe, Germany's 10-year yield rose to a one-week high,
rising 2 basis points on the day to -0.44 DE10YT=RR , helped by
better than expected German retail sales. L8N2E815P
UNWELCOME DEVELOPMENTS
China's introduction of sweeping new laws to crack down on
dissent in Hong Kong also has investors eying geopolitical
tensions with trepidation. The laws have prompted fresh protests in the city and
Washington has begun dismantling Hong Kong's special status
under U.S. law. "It's one of a number of geopolitical factors which is a
negative for some asset classes now," said Imre Speizer, a
foreign exchange strategist at Westpac in Auckland.
Currency markets were in a holding pattern before the next
slew of data due to provide a snapshot of the U.S. recovery.
The dollar .DXY rose overnight but edged back down in
early London trading, before U.S. manufacturing PMI and
unemployment data. The euro was broadly flat on the day, at
$1.12275 EUR=EBS .
U.S. manufacturing activity data on Wednesday is forecast to
show a recovery from an 11-year low in April while the non-farm
payrolls report on Thursday is expected to show the economy
added 3 million jobs in June.
Gold XAU= hovered near an 8-year high at $1787.86 an
ounce. GOL/
Brent crude LCOc1 rose 2.5% to $42.32 a barrel, while U.S.
crude CLc1 was up 2.7% at $40.31 a barrel after an industry
report showed crude stockpiles in the U.S. staged a bigger drop
than expected. O/R
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Emerging markets http://tmsnrt.rs/2ihRugV
World financial markets in 2020 https://tmsnrt.rs/2BmerLo
Global markets and the tale of two quarters https://tmsnrt.rs/381pBBe
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