* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Trump tweets on lack of progress in Mexico talks
* Mexican peso takes added blow on Fitch downgrade
* Wagers on Fed rate cut underpin Wall Street
* Oil bruised after falling to five-month low
By Wayne Cole
SYDNEY, June 6 (Reuters) - Share markets were in a muted
mood on Thursday as fears the U.S. trade tussle with Mexico
would further depress global growth warred with wagers central
banks would have to respond with fresh stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was off 0.2% in very thin trade. Japan's Nikkei
.N225 ended all but flat and Shanghai blue chips .CSI300
eased 0.6%.
E-Mini futures for the S&P 500 ESc1 dipped 0.1%, while
FTSE futures FFIc1 added 0.03%.
Eyes were on the European auto sector for reaction to Fiat
Chrysler's FCHA.MI decision to pull its $35 billion merger
offer for Renault RENA.PA .
Sentiment had soured early in Asia after a meeting between
U.S. and Mexican officials ended with few signs of progress.
"Immigration discussions at the White House with
representatives of Mexico have ended for the day. Progress is
being made, but not nearly enough!" Trump said in a tweet on
Wednesday evening. Talks will resume on Thursday.
Mexican markets were dealt an additional blow when ratings
agency Fitch downgraded the country's credit rating to BBB,
while Moody's changed its outlook to negative from stable.
All of this saw the dollar jump 0.9% against a beleaguered
Mexican peso MXN= .
"We think the markets discount President Trump's threats on
both trade and immigration issues at their own peril," said
Libby Cantrill, head of public policy at PIMCO.
"We estimate the recently implemented higher tariffs on
Chinese products will cost the U.S. economy around 0.3
percentage points of GDP, and the Mexican tariff hikes, if they
reach the full 25%, could double our estimate."
Wall Street had still ended Wednesday in the black, but only
because investors reckoned the Federal Reserve would have to cut
rates as insurance against a slowdown. Such is the lust for stimulus that a dismal reading on U.S.
private-sector jobs was greeted with cheer as it seemed to add
to the case for an early easing. Two-year Treasury yields US2YT=RR struck their lowest
since December 2017 in response, while futures have priced in
around 68 basis points of easing by December. FEDWATCH
The Dow .DJI ended Wednesday up 0.82%, while the S&P 500
.SPX gained 0.82% and the Nasdaq .IXIC 0.64%.
WATCHING THE ECB
In currency markets, the safe-haven yen was again in demand
and nudged the dollar down 0.3% to 108.14 JPY= . The dollar
fared better against a basket of currencies to trade at 97.244
.DXY , having bounced from a seven-week low overnight.
The euro eased back to $1.1228 EUR= after briefly
stretching as high as $1.1306 on Wednesday.
Its near-term fortunes lie with the European Central Bank,
which is expected to attempt to give an ailing economy a fillip
at a policy meeting later on Thursday.
At a minimum, the central bank will likely offer to pay
banks if they borrow cash from it and lend it out to households
and firms. "We expect the ECB to turn more dovish and push the euro
lower," said CBA FX analyst Joseph Capurso.
"We expect the ECB to change their forward guidance on
interest rates and to trim their macroeconomic projections and
modify their forward interest rate guidance because of low
inflation and heightened uncertainty about global trade."
In commodity markets, all the chatter of rate cuts helped
lift gold to 15-week highs and the precious metal was last
trading at $1,332.71 per ounce XAU= .
Oil prices flatlined after diving overnight when the Energy
Information Administration (EIA) reported the largest build in
crude oil and oil product inventories since 1990. O/R
U.S. crude CLc1 was last up 2 cents at $51.70 a barrel
having hit its lowest since January, while Brent crude LCOc1
futures inched up 3 cents to $60.66.
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(Editing by Sam Holmes and Jacqueline Wong)