* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Reuters Live Markets blog on European and UK stock
markets:
LIVE/
(Updates prices, adds background.)
By Elizabeth Howcroft
LONDON, Aug 4 (Reuters) - European shares were mixed on
Tuesday after company earnings reports, and the dollar's rebound
stalled as investors waited for talks about government aid in
the United States to make progress.
Strong U.S. manufacturing data boosted sentiment through the
Asian session, even as Sino-U.S. relations took a turn for the
worst. After a rally on Monday, European shares opened higher but
quickly slipped into the red, with the pan-European STOXX 600
down 0.3% .STOXX and London's FTSE 100 flat on the day .FTSE
by 1034 GMT.
Disappointing earnings reports from the world's largest
spirits maker, Diageo Plc DGE.L , and German drugs and
pesticides group Bayer BAYGn.DE took the shine off
growth-linked cyclical stocks. Shares in BP jumped after it cut its dividend and posted a
record loss that was in line with expectations. The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was up 0.4% after reaching a five-month
high just after 0700 GMT. MSCI's main European Index .MSER was
up 0.1%.
U.S.-China tensions worsened as President Donald Trump said
that he will ban Chinese app TikTok in the U.S. unless a tech
company such as Microsoft buys it. The move provoked an outcry on Chinese social media and
criticism from a prominent Chinese investor in TikTok's owner,
ByteDance. China said it would not accept the "theft" of a Chinese
company and that is has "plenty of ways to respond if the
administration carries out its planned smash and grab".
"This kind of rhetoric lines up with our view that
U.S.-China frictions may increase into the U.S. elections,
injecting volatility into related assets like China tech ADRs
(American Depository Receipts) while also supporting insurance
assets like gold," wrote UBS Global Wealth Management's chief
investment officer, Mark Haefele.
The United States and China are also clashing over Chinese
journalists working in the United States, who may be forced to
leave the country if their visas are not extended. The rebound in the dollar faltered, with investors still
waiting for Washington to make progress in talks over the next
round of fiscal stimulus.
A $600-per-week enhanced unemployment benefit, which
provided a lifeline for the tens of millions of Americans who
lost their jobs due to the pandemic, expired on Friday.
Lawmakers said they had made progress in the talks, and U.S.
House Speaker Nancy Pelosi will meet again with Treasury
Secretary Steven Mnuchin and White House Chief of Staff Mark
Meadows on Tuesday, raising hopes for a breakthrough.
"A second wave of Covid-19, contested elections, civil
unrest and escalating tensions with China could provide a toxic
cocktail for the final quarter of the year," Philip Marey,
senior U.S. strategist at Rabobank, wrote in the bank's monthly
outlook.
Marey said that he expects another economic contraction, or
at least a "substantial slowdown" in the fourth quarter, which
could force the Federal Reserve into action.
"If they don't want to cut policy rates below zero, yield
curve control is the next logical step," he said. "Meanwhile,
any failure by Congress and the White House to provide
sufficient fiscal stimulus going forward will only speed up the
Fed's thinking process."
The dollar index was flat on the day at 93.532 =USD . The
euro rose 0.1% against the dollar, to $1.17720 EUR=EBS .
Ten-year German bond yields edged down to -0.5400, but
remained above the two-month lows reached at the end of last
week DE10YT=RR .
Spot gold edged down from all-time highs, at $1,974.3033 per
ounce, amid mounting COVID-19 cases and a warning from the World
Health Organization that the road to normality would be long.
Oil prices slipped on fears that a new wave of COVID-19
infections could curtail a pick-up in fuel demand, just as major
producers ramp up output. U.S. West Texas Intermediate (WTI) crude futures CLc1 fell
59 cents, or 1.44% to $40.42 a barrel at 1057 GMT. Brent crude
LCOc1 futures fell 59 cents, or 1.3% to $43.56 a barrel.
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Emerging markets http://tmsnrt.rs/2ihRugV
Asset performance since coronavirus outbreak https://tmsnrt.rs/3kcbrDd
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