* European shares set to open lower amid cautiousness
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Tariffs to stay until there is 'Phase 2' agreement:
Mnuchin
* U.S.-China 'Phase 1' trade deal to be signed later on
Wednesday
* Wall St stocks end flat; yields inch lower; FX subdued
By Tomo Uetake
TOKYO, Jan 15 (Reuters) - Stocks slipped in Asian trade on
Wednesday as investors awaited the signing of an initial
U.S.-China trade deal, with sentiment somewhat dented by
comments from the U.S. Treasury Secretary that tariffs would
remain in place for now.
European shares were expected to follow suit, with major
European stock futures STXEc1 FDXc1 FFIc1 trading down
around 0.2-0.3%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 0.48%, retreating from its 19-month peak
marked on Tuesday, and Japan's benchmark Nikkei .N225 shed
0.5%, off its four-week high hit the previous day.
South Korea's KOSPI .KS11 dropped 0.54% and China's
Shanghai Composite .SSEC and Hong Kong's Hang Seng .HSI shed
0.65% and 0.74%, respectively, while Australian stocks .AXJO
bucked the trend to climb 0.47% on the back of stronger mining
shares.
Treasury Secretary Steven Mnuchin said late on Tuesday that
the United States would keep in place tariffs on Chinese goods
until the completion of a second phase of a U.S.-China trade
agreement, triggering some profit-taking in risk assets.
The news came hours before the signing of a preliminary
trade agreement to ease an 18-month-old trade war between the
world's two largest economies.
Wall Street stocks dipped on Tuesday, reversing earlier
intraday record highs, after media reported the United States
would likely maintain tariffs on Chinese goods past November's
presidential election. .N/C
"We should not expect further tariff relief until after the
November presidential elections, suggesting today's agreement is
probably as good as it gets for 2020," said Tapas Strickland,
director of economics at National Australia Bank in Sydney.
Mnuchin's comment didn't come as a total surprise to the
market and the underlying sentiment should remain intact, he
added.
U.S. Treasury yields ticked down as investors took stock of
weaker-than-expected consumer prices and the expected signing of
the interim trade deal, with the benchmark 10-year note yield
falling to 1.802% US10YT=RR . US/ Markets were also weighing the impact of the U.S. government
nearing publication of a rule that would vastly expand its
powers to block shipments of foreign-made goods to China's
Huawei, as it seeks to squeeze the blacklisted telecoms company,
two sources said. "I think the Trump administration will continue to put
pressure on China in this way or some other, even after signing
a Phase 1 deal," said Yuichi Kodama, chief economist at Meiji
Yasuda Life Insurance in Tokyo.
In the currency market, the Japanese yen, often perceived as
a safe haven, reversed Tuesday's losses against the dollar as
news U.S. tariffs would remain on Chinese goods through the U.S.
election hurt risk sentiment.
The yen was last changing hands at 109.92 yen JPY= to the
dollar, a shade firmer on the day, after hitting its weakest
level in nearly eight months of 110.22 yen the previous day.
The euro was last traded at $1.1133 EUR= and the dollar
index against a basket of currencies stood at 97.339 .DXY ,
both little changed on the day.
The offshore yuan CNH= weakened to 6.905 per dollar, one
day after rising to its strongest level in six months of 6.865.
China's central bank extended fresh short- and medium-term
loans on Wednesday but kept the borrowing cost unchanged, as it
seeks to maintain adequate liquidity in a slowing economy.
Oil prices slipped on Wednesday on worries that the pending
Phase 1 trade deal between the world's two biggest crude users
may not lead to more fuel demand as Washington keeps tariffs in
place. O/R
Concerns about increasing supply also pressured prices after
a government report on Tuesday said output from the United
States will increase in 2020 by more than previously forecast.
Brent crude LCOc1 dropped 0.16% to $64.39 per barrel and
U.S. West Texas Intermediate crude futures CLc1 were down
0.17% at $58.13 a barrel.
(Editing by Lincoln Feast and Jacqueline Wong)