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GLOBAL MARKETS-Trade optimism bolsters shares, pound whipsawed by Brexit drama

Published 24/09/2019, 13:31
© Reuters.  GLOBAL MARKETS-Trade optimism bolsters shares, pound whipsawed by Brexit drama
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(Updates market moves)

* Europe, S&P500 futures gain after Mnuchin confirms trade

talks

* Euro zone data weigh on euro, deepen anxiety about economy

* Sterling rises after parliament suspension ruled unlawful

* World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Marc Jones

LONDON, Sept 24 (Reuters) - Rekindled U.S.-China trade hopes

supported share markets on Tuesday, while Britain's pound was

whipsawed by another twist in the Brexit drama as the UK's top

court dramatically overruled the government's suspension of

parliament.

There was more glum data from Germany to contend with too,

but Monday's confirmation that U.S. Treasury Secretary Steven

Mnuchin's and Trade Representative Robert Lighthizer would meet

Chinese Vice Premier Liu He in two weeks' time bolstered

spirits.

The pan-European STOXX 600 index .STOXX and Wall Street

futures .ESc1 were both up as much as 0.3% .EU .N and

Germany's bond yields also steadied after Monday's dour PMI data

had triggered their biggest fall since June. GVD/EUR

"A perceived lull in U.S.-China trade tensions has eased

market fears about an economic downturn," a group of BlackRock's

investment strategists wrote in a note.

Currency market moves were mostly small-scale, with one

notable exception - the pound.

Traders had waited for a Supreme Court ruling on UK Prime

Minister's Boris Johnson five-week suspension of parliament -- a

move known as prorogation in Westminster speak -- and when it

came it was unanimous and blunt. The move was "unlawful".

Sterling initially climbed as high $1.2487 GBP=D4 on the

view it would help prevent the UK being bundled towards a

'no-deal' Brexit at the end of October. It then lost traction

though and spent the next few hours bobbing between $1.2480 and

$1.2460.

"I wasn't surprised to see it hop higher but I also wasn't

surprised to see cable (pound vs the dollar) run out of steam

ahead of $1.25," said TD Securities' European head of currency

strategy Ned Rumpeltin.

Johnson is now likely to head to his Conservative party's

annual conference at the weekend and rally his troops in

preparation for a likely national election which will be a

bitter fight over Brexit.

"He is going to have to rally his base and he is going to do

that around hard Brexit," Rumpeltin said. "That will be a moment

of clarity for the FX market... It will look at the polling and

the Conservatives are leading in the polls."

GOOD TO TALK

While trade talks remained the primary focus, U.S. investors

were also waiting on closely-followed consumer confidence data

due at 10:00 a.m. ET (1400 GMT) which is expected to remain

robust.

Monday has seen a mixed batch of U.S. economic surveys but

still S&P 500 .SPX had remained within striking distance of

its July all-time high. .N

Overnight, MSCI's broadest regional Asia share index

.MIAP00000PUS inched up 0.1%, led by 0.6% gains in mainland

Chinese shares .CSI300 after the vice head of China's state

planner said Beijing will step up efforts to stabilise growth.

Japan's Nikkei .N225 ended up 0.2% after a market holiday

on Monday and as the yen traded at 107.62 yen per dollar JPY= ,

after reaching two-week highs of 107.32 the previous day.

"The comments (from Mnuchin on China trade talks) gave a

little bit of boost to sentiment, but markets are still not that

optimistic, either," said Masahiro Ichikawa, senior strategist

at Sumitomo Mitsui DS Asset Management.

"It seems there have been a lot going on behind the scenes,"

he said, referring to U.S. President Donald Trump's questioning

a decision by his top trade negotiators to ask Chinese officials

to delay a planned trip to U.S. farming regions. That cancellation was seen by markets as a sign all is not

well in the U.S.-China talks and had helped send share prices

lower on Friday.

Among the main commodities, gold held its ground and oil

prices dipped on expectations that the slowing global economy

will keep demand subdued. O/R

Brent crude futures LCOc1 fell 40 cents to $64.37 a barrel

by 0624 GMT. West Texas Intermediate futures CLc1 were down 33

cents to $58.31.

"The demand side of the equation is back in focus," said

Michael McCarthy, senior market analyst at CMC Markets in

Sydney, pointing to sluggish manufacturing numbers in leading

economies in Europe as well as Japan.

Global earnings https://tmsnrt.rs/2mKIvsF

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