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Global Markets: Asia stocks pull back after soft China data; oil higher

Reuters  |  TOKYO 

By Shinichi Saoshiro

(Reuters) - Asian stocks pulled back on Tuesday, brushing off a firmer lead from Wall Street, as investors turned cautious after soft Chinese economic data and awaited fresh developments on U.S.-trade talks and

prices held near 3-1/2-year highs on supply concerns, while the dollar edged higher, underpinned by a rise in U.S. bond yields.

Spreadbetters expected European stocks to follow their Asian peers lower, with Britain's FTSE, Germany's DAX and France's CAC all seen shedding 0.2 percent.

MSCI's broadest index of shares outside fell 0.8 percent after rising the previous day to its highest since late March. The index had rallied for three straight sessions prior to Tuesday.

Japan's Nikkei dipped 0.1 percent, with its surge to a three-month peak bogging down.

"The markets appear to be taking a breather after their recent surge, awaiting fresh developments in matters such as U.S.-trade issues and Washington's upcoming summit with North Korea," said Yoshinori Shigemi, at in

The two countries are still "very far apart" on resolving trade frictions, U.S. to said on Tuesday as a second round of high-level talks was set to begin in

Hong Kong's Hang Seng lost 0.9 percent, pulling back from a two-month peak to snap a five-day winning run, while slipped 0.2 percent.

China reported weaker-than-expected investment and in April and a drop in home sales, clouding its economic outlook even as policymakers try to navigate debt risks and defuse a heated trade row with the

The downbeat economic temporarily offset optimism over further foreign inflows into Chinese stocks ahead of their inclusion in MSCI's widely tracked equity benchmarks from June 1.

Investors in Chinese equities will likely have to re-jig their exposure after the U.S. index publisher made some last-minute tweaks in its index weightings on Tuesday. said 234 Chinese large caps will be included in its global and regional indexes month.

Wall Street scraped out gains on Monday after weakness in defensive stocks offset optimism following U.S. Donald Trump's conciliatory remarks toward China's that helped calm U.S.-China trade tensions.

While sometimes raise inflation concerns, the surge - Brent has risen 17 percent so far in 2018 - was seen to be generally supportive for equities.

"The recent rise in prices of won't have a broadly negative impact on equity markets if it continues at the current pace," said Masahiro Ichikawa, at in

"The rise in is boding well for certain stock sectors like "

Brent crude added 6 cents to $78.29 a barrel, nearing a 3-1/2-year high marked on Monday. U.S. advanced 2 cents to $70.98 and in reach of its highest level since November 2014 scaled on Thursday.

received their latest lift as reported that the global has been virtually eliminated. Tensions in the and uncertainty about output from amid renewed U.S. sanctions have contributed to the recent rise in oil prices. [O/R]

"The commitment of and the rest of to the production cuts is a major factor in supporting the price at the moment as well as the possibility of reduced exports from due to sanctions," said William O'Loughlin, at

In currencies, the dollar index against a basket of six major currencies gained 0.3 percent to 92.801 .

The greenback took a knock against the euro earlier on Monday after policymaker said the ECB could give fresh timing guidance of its first rate hike as the end of its exceptional bond purchases approaches.

The U.S. currency managed to bounce back, however, after reiterated support for gradual interest rate increases.

The euro lost 0.1 percent to $1.1913 after pulling back sharply from the previous day's high of $1.1996.

The dollar was 0.25 percent higher at 109.920 yen, adding to the previous day's gains.

The currency drew support as yields rose amid the easing of U.S.-China trade tensions.

The 10-year Treasury note yield extended its overnight rise and brushed a 12-day high of 3.021 percent .

(Reporting by Shinichi Saoshiro; Additional reporting by in Singapore; Editing by Shri Navaratnam, & Kim Coghill)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, May 15 2018. 11:26 IST