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* Sterling hits lowest since January amid Brexit chaos
* Global stocks under pressure, while bonds gain
By Josephine Mason and Shinichi Saoshiro
LONDON/TOKYO, May 22 (Reuters) - Global stocks were slightly
lower on Wednesday as investors sought safety in bonds, the
Japanese yen and Swiss franc in muted trade amid renewed worries
over the U.S.-China spat after reports Washington has another
Chinese tech firm in its sights.
Relief over Washington's temporary relaxation of curbs
against China's Huawei Technologies evaporated after reports
that the White House is considering further sanctions on Chinese
video surveillance firm Hikvision. Fears of another blacklisting reinforced worries that U.S.
President Donald Trump is looking beyond sealing a trade deal
with China to a potentially bigger battle aimed at curbing
Beijing's technology ambitions.
"I think the debate is just starting about what the
implications of all this could be if it escalates. It's my
biggest concern," said Simon Webber, lead portfolio manager on
the global & international equities team at Schroders.
The limits which were imposed on Huawei last week and eased
on Monday had sent shivers through global semiconductor stocks
as investors worried about disruption to suppliers of the
world's No. 2 smartphone maker.
"If we get retaliation, if we start deconstructing supply
chains, if we get countries asking whether they can rely on
products and services overseas, then we'll have much more
uncertainty and a much more worrying environment," said Webber.
MSCI world equity index .MIWD00000PUS , which tracks shares
in 47 countries, was down slightly at 0905 GMT, as investors
shunned assets considered risky in times of economic and
political strife.
The reports rattled European and Asian stocks, with the
euro-zone STOXXE .STOXXE down 0.1%.
London's FTSE 100 blue chips FTSE bucked the trend, rising
0.4% as sterling fell amid renewed worries about the country's
messy exit from the European Union.
The Chinese markets, which have endured a volatile few
months, were on the backfoot. The Shanghai Composite Index
.SSEC closed down 0.5%.
The threat dampened Australia's post-election optimism
slightly, but stocks .AXJO still hovered near the 11-year
highs scaled on Monday.
"Some in the markets will continue to cling on to hopes of
the United States and China reaching an agreement at the
upcoming G20 meeting," said Masahiro Ichikawa, senior strategist
at Sumitomo Mitsui DS Asset Management.
"But the ongoing trade conflict looks to be a protracted
one, and its potentially negative impact on various economies is
becoming a running concern."
Leaders from G20 nations are scheduled to gather for a
summit in Japan at the end of June.
Australia's stocks index is the only major global bourse to
notch up gains since Trump ramped up his battle with Beijing on
May 6, largely due to the election euphoria, while South Korea's
KOSPI .KS11 is the biggest loser.
RISK OFF
With the risk appetite off, investors sought havens in the
Swiss franc, Japanese yen and German government bonds. FRX/
GVD/EUR
The yen strengthened away from two-week lows against the
dollar, rising 0.1% to 110.39 yen JPY= , while the Swiss franc
EURCHF= CHF= was higher against the euro and the dollar.
US/
Moves across all financial markets were largely muted,
though, as many investors preferred to keep to the sidelines.
The standout was the pound, which was down 0.2% at $1.2712
GBP=D4 , its lowest since January amid a deepening crisis over
the UK's exit from the EU after Prime Minister Theresa May's
final gambit failed dramatically. The euro was little changed at $1.1164 EUR= .
In commodities, U.S. West Texas Intermediate (WTI) crude
futures CLc1 were down 0.6% at $62.567 per barrel after
American Petroleum Institute data showed that U.S. crude
stockpiles rose unexpectedly last week. O/R
Oil was also pressured by Saudi Arabia reiterating that it
would aim to keep the market balanced and try to reduce tensions
in the Middle East. Brent crude futures LCOc1 lost 0.7% to $71.69 per barrel.
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