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Global Markets: Stocks buoyed by deal to avert U.S. government shutdown

Reuters  |  TOKYO 

By Hideyuki Sano

(Reuters) - Asian shares gained on Tuesday as investors hoped a new round of U.S.-trade talks would help to resolve a dispute that has dented global growth and some corporate earnings.

Market sentiment also got a boost on lawmakers had reached a tentative deal on border security funding that could help avert another partial government shutdown due to start on Saturday. Congressional aides, however, said it did not contain the $5.7 billion wants for a border wall.

S&P 500 futures were up nearly 0.5 percent.

Spreadbetters expected European stocks to track and open higher, with Britain's FTSE gaining 0.25 percent and Germany's DAX and France's CAC each adding 0.5 percent.

MSCI's broadest index of shares outside edged up 0.3 percent.

The Shanghai Composite Index rose 0.35 percent, South Korea's climbed 0.6 percent and Australian shares were up 0.3 percent.

Japan's Nikkei advanced 2.6 percent after a market holiday on Monday, lifted by a weaker yen.

and Chinese officials expressed hopes the new round of talks, which began in on Monday, would bring them closer to easing their months-long trade war.

and are trying to hammer out a deal before a March 1 deadline, without which tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent.

"There will be no winner in a trade war. So at some point they will likely strike a deal," said Mutsumi Kagawa, at in

The trade dispute has already started to impact global growth, hitting businesses confidence, factory activity and disrupting supply chains. The worry is that a protracted Sino-U.S. tariff row could severely hurt corporate earnings globally.

Analysts are now expecting U.S. corporate earnings for the current quarter to drop 0.2 percent from last year, which would be the first contraction since the second quarter of 2016.

In the currency market, the dollar held firm, having gained for eight straight sessions against a basket of six major currencies until Monday, its longest rally in two years.

Although the Federal Reserve's dovish turn dented the dollar earlier this year, some analysts noted the U.S. currency still has the highest yield among major peers and that the Fed continues to shrink its balance sheet.

"We see the dollar's strength essentially stemming from the Fed's balance sheet reduction," said Makoto Noji, chief at

Growing evidence of a loss of momentum in the global has also lifted the U.S. currency, most recently led by the European Commission's downgrade of growth in Europe, making the dollar a better investment option by default.

The dollar index rose to its highest in almost three months, at 97.123, on Monday. It last stood at 97.055.

In contrast, the euro dropped to as low as $1.1267, its weakest in 2-1/2 months, and last traded at $1.1277.

The dollar popped up to a six-week high of 110.65 yen.

ticked up after falls on Monday as traders weighed support from OPEC-led supply restraint and a slowdown in the global

U.S. crude futures traded at $52.68 per barrel, up 0.5 percent. Brent crude rose 0.6 percent to $61.89 per barrel.

(Additional reporting by in Tokyo; Editing by and Jacqueline Wong)

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

First Published: Tue, February 12 2019. 12:10 IST