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Global Markets: Asia shares subdued, May's Brexit options eyed after crushing vote defeat

Reuters  |  TOKYO 

By Daniel Leussink

(Reuters) - Asian shares took a breather on Wednesday after rallying the previous day on Chinese stimulus hopes, with investors assessing Brexit options after British lawmakers trounced Theresa May's deal to pull out Britain from the

MSCI's broadest index of shares outside was off a touch, having swung up on Tuesday after Chinese officials came out in force to signal more measures to stabilise a slowing

The hopes also helped boost Wall Street overnight, though the early session in saw investors tread cautiously.

Australian shares tacked on 0.1 percent while Japan's Nikkei lost 0.7 percent.

May's crushing loss marks the collapse of her two-year strategy of forging an amicable divorce with close ties to the EU after the March 29 exit.

Investors' focus is now on a confidence vote on May's government by lawmakers later on Wednesday.

Sterling was last trading at $1.2848 on the dollar, off about 0.1 percent. It had rallied more than a cent from the day's lows against the dollar with the sizable defeat for May seen forcing Britain to pursue different options.

"was clearly prepared to take that loss on her deal. She seems to have a plan in place for what she's going to do," said Nick Twidale, Sydney-based at Australia.

Twidale said he expected more volatility across the UK market and in sterling over the coming sessions. "The stumbling block is saying it's not going to renegotiate on that deal. I'm not so sure that they won't."

May's defeat also fuelled volatility in UK-focused exchange-traded funds. A Tokyo-traded FTSE 100 ETF was down about one percent on Wednesday.

In Tuesday's session on Wall Street, the S&P 500 gained 1.1 percent as technology and gained on Inc's plans to raise fees for U.S. subscribers.

The S&P 500 communication services index, which includes and Alphabet Inc, jumped 1.7 percent, while the tacked on 1.5 percent.

The stimulus hints and dovish remarks by one of the U.S. central bank's most hawkish policymakers also helped lift the U.S. market.

Ester George, of the Federal Reserve of Kansas City and a voting member of the Fed's policy-setting committee this year, made the case for patience and caution on interest rate hikes to avoid choking off growth.

Twidale said the cautious policy stance of a growing number of Fed officials is pushing out expectations of a U.S. rate hike to June or possibly even further out to September.

Elsewhere in the currency market, the euro changed hands at $1.1405, holding steady after giving up nearly half a percent during the previous session.

Against the Japanese yen, the dollar was down nearly 0.3 percent at 108.41 yen.

U.S. Treasuries steadied after a choppy overnight session. The yield on benchmark 10-year notes last stood at 2.709, a tad lower from 2.718 percent at the U.S. close on Tuesday.

In commodities, prices rose about 3 percent overnight supported by China's promise of more stimulus. Worries over slowing demand have been one of the key factors in te recent slide in

U.S. Intermediate crude futures were last trading 30 cents, or 0.6 percent, lower at $51.81 a barrel. Brent futures were also off 30 cents, down about half a percent, at $60.34 a barrel.

Spot gold was 0.1 percent higher at $1,291.30, not far off a seven-month peak of $1,298.60 scaled on Jan. 4.

(Editing by Shri Navaratnam)

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

First Published: Wed, January 16 2019. 08:09 IST
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