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Global stocks battered by Wall Street, fears of U.S. slowdown

Reuters  |  NEW YORK 

By Laila Kearney

(Reuters) - Global stocks fell on Wednesday, plagued by a flattening that sparked concerns about a economic slowdown in the and weakening expectations of a lasting U.S.-trade truce, while the dollar steadied.

U.S. markets were closed to mark former George H.W. Bush's death, but the effect of Wall Street's turmoil in the previous session, when New York-listed shares tumbled more than 3 percent, was felt in and

The MSCI's all-country index <.MIWD00000PUS> shed 0.5 percent.

Tuesday's markets chaos came a day after equities boomed on optimism that and the U.S. had temporarily called a tariff ceasefire to sort out their trade dispute. But doubts began soon after along with threatening "major tariffs" on Chinese imports if his administration failed to reach an effective trade deal with

"As I look into next year, most expectations for further gains have been pared back. Investors have gone from extended bullishness at the start of the year on equities to an uncomfortable neutrality," said Paul O'Connor, of multi-asset at

Trump's comments, alongside the drop in U.S. stocks and yields, pushed Asian shares outside <.MIAPJ0000PUS> 1.4 percent lower. The pan-European STOXX 600 index <.STOXX> lost 1.16 percent.

Markets across the world have been rattled by fears, exemplified by the flattening

The benchmark Treasury 10-year yield fell to its lowest point since mid-September on Tuesday, while the spread between the 10-year yield over its two-year counterpart also shrank to the smallest since the start of the financial crisis in January 2008. That signalled to some investors an approaching U.S. economic slowdown.

The flattening of the curve gained momentum after last week's signal by the Federal Reserve that it may be nearing an end to its three-year rate-increase cycle.

The dollar steadied on Wednesday after it took a hard hit in the early reaction to concerns and the initial thaw in trade tensions between and sapped demand for the safe-haven greenback.

The greenback rose 0.32 percent against the Japanese yen and the euro gave up all its early gains to trade down 0.04 percent against the dollar.

Gold, which moves inversely with the dollar, slipped on expectations of more rate hikes following remarks from a U.S. Federal Reserve and as some investors booked profits after prices climbed to their highest in more than five weeks.

Palladium, on the other hand, surpassed the bullion for the first time in about 16 years, to hit a record high of $1,263.56 per ounce as higher speculative interest and larger supply deficit boosted the

Markets are also bracing for more on Brexit. British suffered embarrassing defeats on Tuesday, the start of five days of parliamentary debate over her plans to leave the

The pound rose off 17-month lows of $1.2659 hit on Tuesday to around $1.2751, up 0.3 percent on the day, amid creeping optimism that Britain could opt to stay in the EU after all.

The threat of slowing economic activity also weighed on oil prices, but went higher on Wednesday ahead of a meeting of the world's biggest exporters who will discuss cutting output to help shore up prices and curb excess supply.

Brent crude futures rose 39 cents to $62.47 a barrel. U.S. Intermediate (WTI) crude futures rose 37 cents to $53.62 a barrel.

(Additional reporting by Sujata Rao, K. Sathya Narayanan, in Tokyo, Virginia Furness and Saikat Chatterjee in London; Editing by Nick Zieminski)

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

First Published: Thu, December 06 2018. 00:50 IST