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GLOBAL MARKETS-Shares, bond yields slip on sour trade deal sentiment

Published 13/11/2019, 18:02
© Reuters.  GLOBAL MARKETS-Shares, bond yields slip on sour trade deal sentiment
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(Adds U.S. market open, changes byline, dateline; previous

LONDON)

* Trump's trade remarks reverberate a second day

* Fed chief's economic outlook buoys U.S. stocks

* Emerging market indexes tumble on Hong Kong unrest

* Oil prices steady on upbeat economic outlook

By Herbert Lash

NEW YORK, Nov 13 (Reuters) - Global equity markets and

government bond yields fell on Wednesday as sentiment soured

that a U.S.-China trade deal can be reached soon and on fears

intensifying unrest in Hong Kong may lead to a Chinese

crackdown.

Gold prices rose on fading investor optimism on the

U.S.-China trade talks, helping to boost the appeal of the Swiss

franc, U.S. dollar and government debt as a safe-haven.

A measure of emerging market currencies slipped, as did an

index of emerging market equities, with both registering their

largest single-day declines in almost three months.

The dollar was stable after a rise in U.S. consumer prices

was greater than expected and Federal Reserve Chair Jerome

Powell offered an upbeat economic outlook, bolstering the case

for the U.S. central bank to pause its monetary easing cycle.

"It seems overnight there were a lot more fears that the

U.S. and China were further apart on the trade deal than

initially suggested," said Gennadiy Goldberg, an interest rate

strategist at TD Securities in New York.

Powell said he saw "sustained expansion" ahead for the U.S.

economy, with low unemployment boosting household spending and

the full impact of the three interest rate cuts in the past

three months still to be felt. U.S. stocks traded little changed as investors eyed an

improving economic outlook. But fears of a pending recession

have lessened, a reason why the spread between short- and

long-term Treasury yields has widened, said Joseph LaVorgna,

chief economist for the Americas at French bank Natixis in New

York.

"You're going to see the market move higher. We're going to

consolidate and move higher because the fundamentals are pretty

solid and that means that you're going to get 10-year notes up

over 2%," LaVorgna said.

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

0.27%, while the FTSEurofirst 300 index .FTEU3 of leading

European shares fell 0.22%. Stocks on Wall Streets pared initial

losses to trade up slightly.

The Dow Jones Industrial Average .DJI rose 16.28 points,

or 0.06%, to 27,707.77 and the S&P 500 .SPX gained 0.43

points, or 0.01%, to 3,092.27. The Nasdaq Composite .IXIC

dropped 4.32 points, or 0.05%, to 8,481.77.

Emerging markets were hammered as anti-government protesters

dug in across Hong Kong and set the stage for further

confrontation as police said violence in the city had reached a

"very dangerous and even deadly level." MSCI's emerging markets equity index .MSCIEF lost 1.23%

and its emerging markets currency index .MIEM00000CUS fell

0.42%, both the biggest one-day declines since late August.

The dollar index .DXY rose 0.04%, with the euro EUR=

down 0.04% to $1.1003. The Japanese yen JPY= strengthened

0.21% versus the greenback at 108.80 per dollar.

Oil prices reversed early losses after the Organization of

the Petroleum Exporting Countries said it saw no signs of global

recession and rival U.S. shale oil production could grow by much

less than expected in 2020.

Powell's comments on the U.S. economy also supported prices.

Brent crude futures LCOc1 rose 11 cents to $62.17 a

barrel, while U.S. West Texas Intermediate crude CLc1 rose 42

cents to $57.22 a barrel.

Benchmark 10-year U.S. Treasury notes US10YT=RR rose 8/32

in price to push their yield down to 1.8808%.

Bond yields in the euro zone fell as investors in Europe

weighed remarks on Tuesday by U.S. President Donald Trump on the

trade outlook.

Tariffs would be raised on Chinese goods "very

substantially" if China does not make a deal with the United

States, Trump said in a speech at the Economic Club of New York.

Benchmark 10-year German government bond yields fell the

most for a day since June, down 6 basis points at -0.3%. Most

euro zone 10-year bond yields fell 4 to 6 basis points on the

day DE10YT=RR NL10YT=RR FR10YT=RR .

Hong Kong stocks have suffered during protests https://tmsnrt.rs/2MJbLuj

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