* MSCI ACWI, S&P500 at record high after "phase 1" deal
inked
* Bond yields dip on low inflation data
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano
TOKYO, Jan 16 (Reuters) - World stocks inched to a record
high on Thursday after the United States and China signed a deal
to defuse their 18-month trade war, which has weighed on global
economic growth and hampered investments.
MSCI's broadest index of world stocks .MIWD00000PUS firmed
0.04% in early trade after closing at record level on Wednesday
while its index on Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.10%.
Japan's Nikkei .N225 rose 0.14% while Australian shares
.AXJO were 0.6% higher.
U.S. President Donald Trump and Chinese Vice Premier Liu He
on Wednesday signed a deal that will roll back some tariffs and
see China boost purchases of U.S. goods and services by $200
billion over two years. The deal does not address structural economic issues that
led to the trade conflict, and does not fully eliminate the
tariffs while the $200 billion purchase targets look daunting to
achieve.
Yet it reduced uncertainties that have beset financial
markets.
"Whether somebody looks at this as big progress or little
progress, it is something tangible and so the arrow is pointing
in a direction that the market is comfortable with," said Chuck
Carlson, chief executive officer of Horizon Investment Services
at Hammond, Indiana in the United States.
The S&P 500 .SPX closed at a record high of 3,289.3
points, up 0.19%, with gains fairly small after the market has
rallied for months on hopes of a deal.
The index was dragged down by fall in financial shares
following downbeat earnings from Bank of America BAC.N and
Goldman Sachs GS.N .
"While the trade deal has provided a relief, there wasn't
any positive surprises for markets. For shares to rise further,
we need more evidences of improvement in the real economy and
earnings," said Hirokazu Kabeya, chief global strategist at
Daiwa Securities.
Bond yields dropped as a boost from the trade deal failed to
offset pressure from low U.S. producer price inflation data,
which highlighted persistently low inflationary pressure.
The price index rose less than expected in December to cap
2019 with rise of 1.3%, lowest since 2015. The 10-year U.S. Treasuries yield slipped to one-week low of
1.786% US10YT=RR compared with a high of 1.900% last Thursday.
Weak inflation was evident also in UK where consumer price
inflation slowed to 1.3%, its slowest rate in three years.
The data fanned bets the Bank of England will cut interest
rates at the end of this month, bringing Britain's currency
under further pressure briefly. The pound last traded at $1.3040 GBP=D4 , having managed to
recover a tad from its three-week low touched earlier this week.
The Swiss franc held firm, having rising to its strongest
against the dollar in over a year and its highest against the
euro in almost three years after the United States added
Switzerland to its watchlist of currency manipulators.
Washington's decision led traders to think it will become
difficult for the Swiss National Bank to intervene to weaken the
franc in the future.
The Swiss currency last stood at 0.9637 franc per dollar
CHF= , near Wednesday's high of 0.9631.
In contrast, the Chinese yuan hovered just below its
5-1/2-month high touched earlier this week after Washington
dropped its currency manipulator label on China.
Coupled with the trade deal, warmer ties between the two
countries are seen as positive for the Chinese economy and its
currency.
The offshore yuan stood at 6.8860 to the dollar CNH= , near
Tuesday's high of 6.8662.
Other currencies have mostly muted reaction to the trade
deal.
Against the yen the dollar traded at 109.90 yen JPY= ,
below its near eight-month peak of 110.22 set on Tuesday.
The euro stood at $1.1152 EUR= , extending its recovery
from a low of $1.10855 hit last Friday.
Oil prices edged back after touching a six-week trough the
previous day on data showing big increases in U.S. refined
products.
U.S. West Texas Intermediate (WTI) crude CLc1 gained 0.48%
to $58.09 per barrel. It had fallen to as low as $57.36 on
Wednesday.