* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Asian share indices slip after two days of gains
* Trump holding up China deal, talks down Fed rates and
dollar
* Chinese inflation subdued ex-food, U.S. CPI due next
* Oil prices turn lower again on demand concerns
By Marc Jones
LONDON, June 12 (Reuters) - World share markets snapped a
seven-day winning streak on Wednesday as the White House took a
tough line on trade talks with China, while an impending reading
on U.S. inflation was set to refine the odds of an early cut in
interest rates there.
Europe's main markets followed Asia by declining early on.
London's FTSE .FTSE , the DAX in Frankfurt .GDAXI and CAC40
Paris .FCHI were down 0.2% to 0.4% as traders trimmed some of
June's 4% gains. .EU
Benchmark government bond yields fell as caution grew. FX
dealers kept the dollar near an 11-week low before the U.S.
data, having priced in the first U.S. rate cuts since the
financial crisis.
"I think we are in for a very nervous wait until next week's
FOMC meeting," Saxo Bank's head of FX strategy, John Hardy,
said.
"You have had the markets taking out aggressive positions on
where the Fed is going to go and everybody is wondering whether
they are ready to deliver as much, in terms of guidance, as has
been priced in."
Chinese inflation was in the mix, too. Figures overnight
showed it picked up to a 15-month high of 2.7%, mainly because
of surging pork prices. Excluding food, inflation rose only 1.6%
and suggested plenty of scope for more stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS had slipped 0.6% after two days of gains. Wall
Street's recent rally ended on Tuesday. .N
Japan's Nikkei .N225 dipped 0.3%. Shanghai blue chips
.CSI300 fell 0.7% following a 3% jump the day before.
Hong Kong's Hang Seng .HSI lost 1.7% as demonstrators
stormed roads next to government offices to protest against a
bill that would allow people to be sent to China for trial.
"The impact was short-lived in the past," noted Alex Wong,
director at Ample Finance Group in Hong Kong. "This time people
will look at how the U.S. reacts to this kind of news. The U.S.
attitude towards Hong Kong and China are also not the same."
President Donald Trump said on Tuesday he was holding up a
trade deal with China and had no interest in moving ahead unless
Beijing agrees to four or five "major points", which he did not
specify. He said interest rates were "way too high"
and the Federal Reserve had "no clue".
Fed policymakers will meet on June 18-19. With trade
tensions rising, U.S. growth slowing and hiring in May
declining, markets have priced in at least two rate cuts by the
end of 2019. Futures FEDWATCH imply around an 80% chance of an
easing as soon as July.
That might change depending on what U.S. consumer price data
show later in the session. Headline inflation is expected to
slow to 1.9%, with the core rate steady at 2.1%.
OIL TOILS
Trump also alarmed currency markets by tweeting that the euro
and other currencies were "devalued" against the dollar, putting
the United States at a "big disadvantage".
The euro gained to $1.1336 EUR= , just short of the recent
three-month high of $1.1347. The dollar fell against the yen to
108.25 JPY= and stalled on a basket of currencies at 96.608
.DXY .
"The President's tweets on the USD have the potential to
have much more lasting impact in the coming election year," said
Alan Ruskin, global head of G10 FX strategy at Deutsche Bank.
"Global conditions are nicely set for what has colourfully been
described as a 'currency war' or a currency race to 'the
bottom'."
The Turkish lira weakened before a central bank that's
expected to leave Turkey's main interest rate unchanged at 24%.
In commodity markets, all the chatter of rate cuts kept gold
near 14-month highs at $1,335.51 per ounce XAU= .
Oil prices dropped over 2% as concern about a global
economic slowdown offset expectations that OPEC and its allies
will extend their supply curbs. O/R
Hedge fund managers have been liquidating bullish oil
positions at the fastest rate since late 2018 amid growing
economic fears. Brent crude LCOc1 futures fell $1.4 cents to $60.87, while
U.S. crude CLc1 lost $1.2 to $52.10 a barrel.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Past trade spats have caused dollar depreciation https://tmsnrt.rs/2WR0HkT
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