Gold prices tick higher on fresh US tariff threats, Fed rate cut hopes
* Mixed earnings weigh on European bourses
* Nikkei hits one-year high after S&P 500 reaches record
* Trump talks up progress on China trade
* EU grants Britain three-month Brexit extension
* Market sees Fed cutting rates, cautious on outlook
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Karin Strohecker
LONDON, Oct 29 (Reuters) - World stocks hovered near a
15-month high on Tuesday underpinned by cautious hopes over a
China-U.S trade deal and expectations of another dose of policy
stimulus from the Federal Reserve, with safe havens such as gold
and yen on the back foot.
A mixed bag of earnings offset the chipper mood on European
bourses, with the pan-regional STOXX 600 .STOXX snapping a
six-day winning streak to ease 0.4% and Germany's DAX index
.GDAXI slipped 0.1%. .EU
Britain's FTSE 100 .FTSE fell 0.5% as uncertainty over a
looming general election compounded a 2.6% drop in shares of BP
BP.L after the oil major posted a sharp drop in third quarter
profit. The losses in Europe followed a mixed performance in Asia,
where Japan's Nikkei .N225 rose 0.4% to reach levels last seen
a year ago. Shanghai blue chips .CSI300 dithered either side
of flat.
U.S. President Donald Trump said on Monday he expected to
sign a significant part of a trade deal with China ahead of
schedule but did not elaborate on the timing. The U.S. trade representative also said Washington was
studying whether to extend tariff suspensions on $34 billion of
Chinese goods set to expire on Dec. 28. But analysts cautioned that trade tensions were far from
over.
"It isn't yet clear that an interim deal that kicks trade
worries down the road would be sufficient to allay concerns
about the geopolitical, economic, earnings, and policy
backdrop," Mark Haefele, CIO at UBS Global Wealth Management.
"President Trump's announcement of a Chinese commitment to
buying $40–50 billion of U.S. agricultural products appears
unrealistic – U.S. exports to China peaked at just $26 billion
in 2012, when prices were much higher."
U.S. futures ESc1 NQc1 pointed to a flat open on Wall
Street after Monday's rally in which the S&P 500 .SPX gained
0.56% to a record closing peak, the Dow .DJI rose 0.49% and
the Nasdaq .IXIC 1.01%. .N
Microsoft Corp MSFT.O climbed 2.46% in late NY trade after
winning the Pentagon's $10 billion cloud computing contract,
beating out Amazon.com Inc AMZN.O . Google parent
Alphabet Inc GOOGL.O , meanwhile, slipped after missing
analysts' estimates for quarterly profit even though revenue
growth topped expectations. AND SEE
With markets in wait and see mode for Fed and trade
developments, bond yields inched lower. Germany's benchmark
10-year bond yield hovered just below three-month highs hit on
Monday, when yields across the single currency bloc rose sharply
after the European Union granted Britain a Brexit extension.
Yields on two-year U.S. Treasury notes were flat after
US2YT=TWEB hit four-week highs on Monday at 1.668%. US/
Investors are still looking forward to a likely rate cut
from the Federal Reserve on Wednesday, though the outlook was
less clear beyond that.
"We expect the Federal Reserve will cut rates this week and
possibly once next year, as insurance against a broad economic
slowdown," BlackRock's chief fixed income strategist, Scott
Thiel, said in a note to clients.
The futures market has 50 basis points of cuts priced in by
June FEDWATCH .
Central banks in Japan and Canada also meet this week, with
talk the former might ease further if only to prevent an
export-sapping bounce in its currency.
The shift from safe harbours saw the yen losing steam with
the dollar standing at 108.95 yen JPY= after having reached
its highest in three months. It was eyeing a key technical level
at 109.31.
The euro edged up to $1.1095 EUR= and the dollar index was
little changed against a basket of currencies at 97.784 .DXY .
The British pound GBP=D3 , meanwhile, wobbled briefly as
Britain looked set for a snap December election, with the recent
surge on hopes of a smooth Brexit looking capped by the outside
risks that the various election outcomes could bring to that
scenario.
Sterling has gained more than 5 percent over the last three
weeks against the greenback and stocks rallied as fears of
Britain crashing out of the European Union faded after European
policymakers agreed on a third extension until end-January.
Spot gold slipped 0.5% to $1,485 per ounce XAU= , after
having pulled away from last week's top around $1,517.
Oil prices were pressured by signs of rising U.S. crude
stock piles. O/R Brent crude LCOc1 futures slipped 70 cents
to $60.90 a barrel, while U.S. crude CLc1 lost 1 dollar to
$54.77.
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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election ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>