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GLOBAL MARKETS-World stocks edge off highs to await U.S.-China progress

Published 11/26/2019, 07:48 PM
Updated 11/26/2019, 07:56 PM
GLOBAL MARKETS-World stocks edge off highs to await U.S.-China progress

GLOBAL MARKETS-World stocks edge off highs to await U.S.-China progress

* World stocks inch down, keep highs in sight
* U.S.-China trade talks continue to hog spotlight
* USD off 2-week highs vs yen, US stock futures tad weaker
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Updates with drift lower in world shares)
By Dhara Ranasinghe
LONDON, Nov 26 (Reuters) - World stocks edged off their
highest in almost two years on Tuesday, but kept record levels
in sight, following fresh signs that the United States and China
were working to end a trade war dragging on the global economy.
China's Vice Premier Liu He, U.S. Trade representative
Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin
held a phone call on issues related to a phase one trade
agreement on Tuesday, China said. This, alongside a strong Hong Kong debut for Chinese
e-commerce giant Alibaba in the world's largest share sale this
year, boosted markets in Asia .MIAPJ0000PUS .N225 .AXJO .
MSCI's 49-country main world share index .MIWD00000PUS ,
touched its highest level in almost two years, before drifting
lower as the European session wore on. Still, it remained less
than 1% off record highs hit in early 2018.
European stocks, with the exception of London's FTSE
.FTSE , were broadly lower .GDAXI .FCHI and U.S. equity
futures also inched down ESc1 1YMc1 as a note of caution
returned after a strong rally fuelled by trade talk hopes.
The pan-European STOXX 600 .STOXX remained within striking
distance of four-year highs.
"The outlook is positive as world trade angst is the biggest
negative out there, especially when you throw in loose policy,
the pick-up yields for equities versus bonds and the like," said
Chris Bailey, European strategist at Raymond James in London.
"However, the residual issues are clear: The first is a
reversal in world trade optimism, the second is that valuations
become perceived as overstretched - this can easily happen given
lacklustre corporate earnings growth."
In Asia, Alibaba shares 9988.HK BABA.N opened almost 7%
higher in Hong Kong than their issue price and at a small
premium to pricing in New York. The listing has been seen as a
vote of confidence in Hong Kong after months of anti-government
protests that have rocked the financial hub.
A flurry of major acquisition activity has also supported
sentiment in equity markets, with France's LVMH LVMH.PA
agreeing to buy U.S. jeweller Tiffany TIF.N for $16.2 billion
and Charles Schwab Corp SCHW.N set to purchase U.S. discount
brokerage TD Ameritrade Holding Corp AMTD.O in an all-stock
deal valued at $26 billion. ABOUT TRADE
Still, it was the outcome of U.S.-China trade talks that
remained the key driver for world markets.
The U.S. dollar gave up earlier gains as some of the
optimism over an agreement faded, slipping from a two-week high
of 109.205 yen JPY=EBS hit during Asian trade.
The euro was also a touch firmer at $1.10150 EUR=EBS .
China's yuan - the currency most sensitive to the trade war
- had risen to a one-week high of 7.0181 against the dollar, but
was last trading at 7.0388 CNH=EBS .
"China and the U.S. agreed on a framework to resolve their
phase one issue, which is just a way of saying that they did
admin work," said Sebastien Galy, senior macro strategist at
Nordea Asset Management.
The United States has imposed tariffs on Chinese goods in a
16-month dispute over trade practices that the U.S. government
says are unfair. China has responded with its own tariffs on
U.S. goods.
The next important date to watch is Dec. 15, when Washington
is scheduled to impose even more tariffs on Chinese goods.
Safe-haven bond yields DE10YT=RR nudged back down, also
reflecting the more cautious tone among investors.
The 10-year U.S. Treasury yield was last down 2 basis points
on the day at around 1.75% US10YT=RR .
Elsewhere, Bitcoin BTC=BTSP , the world's biggest
cryptocurrency, dipped to $7,065, holding above six-month lows
hit on Monday after the People's Bank of China launched a fresh
crackdown on cryptocurrencies. U.S. crude CLc1 was flat at $58 a barrel. Brent crude
LCOc1 was little changed at $63.71 per barrel.

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