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Global Markets: Asia shares ease as trade war fears return, pound bewildered by politics

Reuters  |  SYDNEY 

By and Swati Pandey

(Reuters) - Asian shares reversed early gains on Tuesday as anxieties about the Sino-U.S. trade war recast their long shadow over investor sentiment, while several high-profile resignations from kept sterling on the defensive.

MSCI's broadest index of shares outside eased 0.1 percent after earlier rising more than 0.5 percent. The index had gained 1.3 percent on Monday.

The losses were led by China, with blue chips off 0.4 percent. The index added 2.8 percent on Monday for the biggest daily jump since August 2016.

Japan's Nikkei climbed about 0.7 percent and 0.3 percent.

E-mini futures for the firmed 0.1 percent while spreadbetters pointed to a firm start for Europe, with FTSE futures up 0.1 percent.

Investors have been on edge recently with the and slapping levies on each other's exports, spurring fears of a global growth slowdown and hurting stocks and commodities.

On Friday, both and the slapped tit-for-tat tariffs on $34 billion worth of each other's goods, stirring fears of a prolonged dispute. The row has rattled Chinese financial markets, with the yuan suffering its worst monthly loss on record in June.

Despite the overhanging concerns about trade, market attention is expected to turn to other developments, at least for the near-term.

"Many investors are looking ahead to second-quarter earnings season, which begins in earnest Friday...to see how the trade threat is affecting companies," said James McGlew, Perth-based

Both the Dow and boasted their biggest gains in more than a month overnight, as jumped ahead of earnings reports later this week. The index posted its sharpest rise since March 26.

POUNDED

The story in currency markets was all about political capers in

Theresa May's quit on Monday in protest at her plans to keep close trade ties with the after Britain leaves the bloc, stirring rebellion in her party's ranks.

stepped down just hours after David Davis's resignation, emboldening some in her to mull a plot to unseat her.

The uncertainty saw sterling sink as deep as $1.3189 at one stage before bouncing somewhat to $1.3254. It was last down 0.2 percent at $1.3230.

Markets still think it likely the will hike rates in August, and that a full-blown political crisis could be averted.

"It's a big splash with some ripples," said Kerry Craig, at in

"It's a big event but the global ramifications are actually quite muted. We could see further resignations come through but I don't think that will lead to a change in government," Craig added.

"What really is illustrated by this how difficult it is for a country to leave the EU, really setting a precedent for any country that is looking to isolate itself from the "

The pound's pain was a boon for the U.S. dollar which rallied broadly on expectations the Federal Reserve will keep raising its interest rates.

Against a basket of currencies, the dollar bounced to 94.201 from a low of 93.713. The dollar also edged up to 111.16 yen, from a trough of 110.30.

The euro was back at $1.1739, having run into profit-taking at a three-week peak of $1.1790 overnight.

In commodity markets, gained on supply disruptions in and and ahead of looming sanctions on

U.S. crude added 39 cents to $74.23, while Brent rose 37 cents to $78.44 a barrel.

Spot gold was flat at $1,257.01.

(Reporting by and Swati Pandey; Editing by and Sam Holmes)

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

First Published: Tue, July 10 2018. 12:02 IST
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