Bullish indicating open at $55-$60, IPO prices at $37
(Updates throughout, adds comment)
* MSCI ACWI flat
* Euro hits two-month low on poor PMIs
* STOXX 600 down 0.1%
* S&P 500 futures down 0.25%
By Ritvik Carvalho
LONDON, July 24 (Reuters) - Global shares held on to recent
gains on Wednesday as the prospect of new China-U.S. trade talks
drew a guarded welcome from investors, while dour data on euro
zone economic activity hit the euro before a European Central
Bank policy meeting.
Downbeat earnings as well as weaker-than-expected purchasing
manager surveys in France, Germany, and the euro zone as a whole
pushed European shares and the euro lower, with the single
currency dropping to two-month lows.
MSCI'S All-Country World index of stocks .MIWD00000PUS was
flat on the day, keeping its half a percent gain from the
previous day. Futures indicated a lower open on Wall Street.
ESc1 .N
Broad sentiment was buoyed by a Bloomberg report that U.S.
Trade Representative Robert Lighthizer would travel to Shanghai
next week for meetings with Chinese officials. White House economic adviser Larry Kudlow on Tuesday called
it a good sign and said he expected Beijing to start buying U.S.
agriculture products soon. Chinese blue chips .CSI300 climbed 0.8% and MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS gained 0.1%.
"While the resumption of trade talks appears to mitigate any
near-term deterioration in US-China tensions, prudent investors
will not get carried away, seeing as a meaningful deal still
seems a long way off," said Han Tan, market analyst at FXTM.
Stocks are below all-time highs, buoyed by expectations of a
wave of policy stimulus by global central banks and consequently
a decline in bond yields.
The ECB is expected to at least nod to looser policy at its
meeting on Thursday. ECBWATCH
Futures FEDWATCH remain 100% priced for a rate cut of 25
basis points from the Federal Reserve next week and imply an 18%
chance of 50 basis points.
The prospect of widespread central bank largesse helped take
the sting out of the International Monetary fund's downgrade of
its global growth forecasts. "There are two conflicting catalysts for stock traders right
now: on one hand, central banks around the world are about to
embark on an easing initiative...," said Konstantinos Anthis,
head of research at ADSS.
"On the other though, the slowdown in growth on a global
scale and various geopolitical factors keep weighing down on
corporate profitability, asking questions on whether equities
have peaked."
EUROGLOOM
The dollar got help from a deal ending a deadlock over the
U.S. budget, with the index that measures it against a basket of
other currencies up 0.05%. .DXY
The euro reached two-month lows at $1.1127 EUR= , falling
further after the weak PMIs. It also fell to a near-seven-month
trough against the yen at 120.19 EURJPY= , though it recovered
from a two-year low versus the Swiss franc EURCHF= .
A recession in German manufacturing worsened in July and
French business growth slowed unexpectedly, purchasing manager
indexes showed Euro zone business
growth was weaker than expected in July as manufacturing
contracted for a sixth month "The continued malaise in manufacturing amplifies the
prospect that the ECB will act with force in the coming months
and deliver an extensive stimulus package that includes more QE
(quantitative easing), to keep this weakness from infecting the
so-far resilient services sector," said Marios Hadjikyriacos, an
investment analyst at online broker XM.
Money markets are now pricing in around a 52% chance of a
10-basis-point rate cut by the ECB at its Thursday meeting. A
10-bps cut is fully priced in for September's meeting.
ECBWATCH
Sterling gained after two days of losses to touch three-week
highs versus the euro, but options markets signalled pain ahead,
foreseeing a greater risk of a no-deal Brexit under Britain's
new prime minister, Boris Johnson, as economic stress worsens.
GBP/
Gold gained 0.68% to $1,426.60 per ounce XAU= , though it
was still short of last week's peak of $1,452.60.
Oil prices rose as tension grew over Iran, U.S. crude
stockpiles fell and optimism for Sino-U.S. talks revived,
although worries about weak demand kept a cap on gains. O/R
U.S. crude futures CLc1 rose 0.14% to $56.85 a barrel.