GLOBAL MARKETS-Stocks struggle higher, dollar sapped by rate hike uncertainty
* European stocks struggle with car woes, Wall Streetfutures dip
* Nikkei and China shares firm
* Mixed signals on prospect of Sino-US trade thaw
* Dollar subdued as Fed talks about global risks
* Sterling waits for more Brexit developments
* Oil prices recoup some losses on chance of output cut
* Graphic: The rolling bear market
* Graphic: World FX rates in 2018
By Marc Jones
LONDON, Nov 19 (Reuters) - World shares struggled higher onMonday amid conflicting signals of a potential truce in theChina-U.S. trade dispute, while the Federal Reserve's new-foundconcerns over the global economy sapped the dollar.
Asia had taken a while to warm up but finished stronglyand Europe was heading for its first rise in foursessions as mining, tech and bank share gains helped offset a nasty prang to the car sector. It was a bit touch-and-go though. Renault's shares crashedmore than 10 percent as it and Nissan's joint chairman, CarlosGhosn, was arrested in Japan for financial misconduct. The sector's gloom was further compounded by a 10 percentslump in VW's global October numbers, and with Wall Streetfutures dithering either side of flat in New York overallsentiment was starting to backslide again. "I'm not sure one man warrants such a big drop in the shareprice," CMC markets senior strategist Michael Hewson saidreferring to Nissan and Renault's woes.
"But maybe people think it could prompt the Frenchgovernment -- which has a stake in Renault -- to launch anenquiry into the running of the company."
Over in the currency markets, the pound saw some respitefrom last week's Brexit trauma as the dollar and euroboth went limp, as focus switched back to the U.S.-Chinatrade feud. Wall Street had firmed on Friday after U.S. President DonaldTrump said that he might not impose more tariffs on Chinesegoods after Beijing sent a list of measures it was willing totake to resolve trade tensions.
The comment stoked speculation of a deal when Trump meetsChinese President Xi Jinping on the sidelines of a G20 summit inArgentina this month. However, Chinese-U.S. tensions were clearly on display at anAPEC meeting in Papua New Guinea over the weekend, where leadersfailed to agree on a communique for the first time ever.
U.S. Vice President Mike Pence said in a blunt speech thatthere would be no end to U.S. tariffs on $250 billion of Chinesegoods until China changed its ways. "The comments from Trump were seen as offering a glimmer ofhope that further tariff action could be held in abeyance," saidNAB's head of FX strategy, Ray Attrill.
"The exchange of barbs between Pence and Chinese PresidentXi Jinping in PNG on the weekend continues to suggest this isunlikely."
SENSING A FED SHIFT
Also uncertain was the outlook for U.S. interest rates.
Federal Reserve policymakers are still signalling rateincreases ahead but also sounded more concerned about apotential global slowdown, leading markets to suspect thetightening cycle may not have much further to run. Investment bank Goldman Sachs chimed in, saying on Mondaythat it expected the pace of U.S. economic growth to slowtowards the global average next year and that the dollar wouldsee a broad based drop as a result. On top of that, it revised its long-standing bearish view onthe Japanese yen and tipped Latin American currencies, theSwedish krona, the Canadian, Australian and New Zealand dollarsand Israeli shekel for rises next year too.
"We see several changes to the global economic backdropwhich, combined with a few negative medium-run factors, point tomore downside than upside to the broad dollar in 2019," Goldmananalysts said in a macroeconomic outlook report.
That will focus attention on an appearance by New York FedPresident John Williams later on Monday to see if he echoes thesame theme.
Investors have already lengthened the odds on further hikes,with a December move now priced at 73 percent, down from over 90percent. Futures imply rates around 2.74 percent for the end ofnext year, compared to 2.93 percent early this month. Yields on U.S. 10-year paper have duly declinedto 3.08 percent, from a recent top of 3.25 percent.
The dollar followed, to hover at 96.356 against abasket of currencies, down from a peak of 97.693. The euro wasparked at $1.1424 , while the dollar backed off to112.72 yen. BREXIT DRAMA
Sterling edged higher to $1.2854 after politicalturmoil over Brexit caused steep losses last week. British Prime Minister Theresa May said on Sunday thattoppling her would risk delaying Brexit as she faces thepossibility of a leadership challenge from within her own party. With both pro-EU and pro-Brexit lawmakers unhappy with thedraft agreement, it is not clear that she will be able to winthe backing of parliament, increasing the risk that Britain willleave the EU without a deal. Westminster "seems to be playing a high-stakes game of risk,where the outcome could be an accidental no-deal," the head ofBritain's main business lobby, the CBI, said. "Surely, surely,we can do better than this." In commodity markets, gold found support from the drop inthe dollar and held at $1,220. Oil prices suffered their sixth straight week of losses lastweek, but have found some support from expectations that theOrganization of the Petroleum Exporting Countries will cutoutput. Brent crude was up 54 cents at $67.30 a barrel, whileU.S. crude gained 70 cents to $57.16.
(Reporting by Marc Jones; Editing by Kevin Liffey and PeterGraff)
Messaging: marc.jones.thomsonreuters.com@reuters.netTwitter@marcjonesrtrs))Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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