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Global stocks look for direction in trade strife, oil prices leap

Reuters  |  NEW YORK 

By Trevor Hunnicutt

NEW YORK (Reuters) - An index of global stocks rose on Wednesday, helped by a report that Washington is proposing a new round of trade talks with Beijing and as pumped up

The is proposing new talks with aimed at getting bilateral economic negotiations back on track, according to two people familiar with the matter.

MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.22 percent.

rose in and the after U.S. crude inventories dropped and the bite of sanctions on threatened to limit supply.

U.S. crude settled up 1.62 percent at $70.37 per barrel while Brent gained 0.86 percent to $79.74.

The Dow Jones Industrial Average <.DJI> rose 27.86 points, or 0.11 percent, to 25,998.92, the <.SPX> gained 1.03 points, or 0.04 percent, to 2,888.92, and the <.IXIC> dropped 18.25 points, or 0.23 percent, to 7,954.23. [.N]

The market's mood music had been sombre after a weak trading session in Asia, with bourses in Shanghai, Hong Kong and all closing lower.

said on Tuesday the was taking a tough stance on trade issues with That cemented expectations that new levies on Chinese exports would soon be announced.

"What the market needs is a signal of some relaxation in trade rhetoric, a bit of climbdown," said Salman Ahmed, at Investment Managers. "That should be enough as (economic) fundamentals are strong. But you do need a trigger point, and so far we have not seen it."

MSCI's broad emerging markets index <.MSCIEF> touched a near-16-month low before staging a recovery after initially reported that the United States was proposing new trade talks with China, to rise 0.12 percent.

The Chinese yuan traded offshore also gained against the dollar. U.S.-listed exchange-traded funds focused on traded higher, pointing to a strong open for Asian markets on Thursday.

Hard-hit emerging markets currencies <.MIEM00000CUS> were 0.43 percent stronger, helped by a weaker greenback. The <.DXY> fell 0.43 percent as hopes also grew of concessions by that would resolve disputes over reworking the North American Free Trade Agreement.

Ahmed said another positive catalyst for markets could be signals from the that it could slow the pace of interest rate rises. But given the torrent of strong U.S. data, that looks unlikely - data this week showed U.S. small business optimism at the highest level on record.

"In 2015 when emerging markets got into a lot of trouble the Fed recognised the international spillover effect. This time that has not happened," he added.

Markets will also keep an eye on U.S. bonds, especially given the steady march higher in shorter-term Treasuries heavily influenced by expectations of Fed policy. The yield on the 2-year note hit a decade peak of 2.7522 percent despite weaker-than expected price data.

Political risk, meanwhile, returned to the radar of investors in Italian bond yields, which fell to six-week lows in recent days, rose after reported that 5-Star, one of the parties in the ruling coalition, was demanding 10 billion euros in the budget to implement plans for a basic universal income.

(Reporting by Trevor Hunnicutt; Additional reporting by and in London, Shinichi Saoshiro in Tokyo, and Chowdhury in Mumbai; Editing by and Leslie Adler)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, September 13 2018. 02:00 IST