(Recasts ahead of U.S. trading, updates prices throughout)
* European car shares fall on U.S. tariff worries
* Beijing injects masses of cash into financial system
* Huawei subject of U.S., German displeasure
* Pound supported as May wins confidence vote
* Graphic: World FX rates in 2019
* Asian stock markets: By Marc JonesLONDON, Jan 17 (Reuters) - Concern over China's economicoutlook and possible U.S. tariffs on European cars draggedstocks lower on Thursday, while an anti-climactic end to thelatest chapter in the Brexit saga offered sterling a moment'speace.Fresh news had been thin on the ground during the Europeanmorning, but dealers had more than enough to digest from thelast 24 hours to follow Asia's lead and nudge the main boursesinto the red.Europe's carmakers fell as much as 1.5 percent afterU.S. Senate Finance Committee Chairman Charles Grassley said hethought Donald Trump was "inclined" to impose tariffs onEuropean cars to win better terms on agriculture. Banks were hit by disappointing Societe Generale results andthe tech sector was under pressure too after one ofworld's biggest chip producers, Taiwan Semiconductor ,forecast its steepest drop in revenue in a decade. "There is some focus on the Grassley comments in relation toauto trade tariffs and also reference to there not being muchprogress in the U.S. China negotiations last week," said Bank ofTokyo Mitsubishi strategist Derek Halpenny."There has obviously been a lot of optimism (in markets)since the start of the year and risk appetite has had a prettygood run, but this will place a few question marks over that."
MSCI's broadest index of world stocks wasfractionally lower having hit a five-week high. Markets likeJapan had dithered in both directions while futures pointed to Wall Street starting 0.3 percent lower.Some took heart at Beijing's confirmation that Chinese VicePremier Liu He will travel to the United States on Jan. 30 formore negotiations with Washington, but it wasn't enough to tipthe balance more broadly.China's blue-chip index had ended down 0.55percent, led lower by a decline in the country's second-largesthome appliances maker, Gree Electric , after it warnedof slower profit growth as the economy loses steam. Chinese Premier Li Keqiang promised increased governmentinvestment this year and the country's central bank injected
more cash into the financial system, bringing the amount for theweek to 1.14 trillion yuan ($168.74 billion).Stoking additional caution however was news that U.S.lawmakers introduced bills on Wednesday that would ban the saleof U.S. chips or other components to Huawei or otherChinese telecoms firms that violate U.S. sanctions or exportcontrol laws. That came shortly before the Wall Street Journal reportedfederal prosecutors were investigating allegations that Huaweistole trade secrets from U.S. businesses. Separately, Handelsblatt reported the German government isactively considering stricter security requirements and otherways to exclude Huawei from a buildout of fifth-generation (5G)mobile networks. Also lurking were worries the U.S. government shutdown wasstarting to take a toll on its economy. White House economicadviser Kevin Hassett said the shutdown would shave 0.13 percentoff quarterly economic growth for each week it goes on.
PLAN B OR NOT PLAN BAs expected, British Prime Minister Theresa May narrowly wona confidence vote overnight and invited other party leaders fortalks to try to break the impasse on a Brexit agreement. An outline for Plan B is due by next Monday and markets arecurrently assuming that with no easy way forward for May shewill have to extend the date of Britain's exit from the EuropeanUnion past the scheduled March 29."Nothing has happened in the last 24 hours to dissuade usfrom the view that we are headed in the direction of an Article50 delay, a softer Brexit or no Brexit," said Ray Attrill, headof FX strategy at NAB.All of which left the pound at $1.2872 , and though itwas still short of Monday's peak of $1.2929, it did manage a newseven-week high of 88.32 pence against the euro before steadying .The U.S. dollar was mixed, easing against the yen to 108.80 but flat versus the euro at $1.1400 . The dollarindex was barely moving too at 96.043 as a drop in eurozone bond yields also helped drag down those on Treasuries.In commodity markets, palladium hit record highsthanks to increasing demand and lower supply while gold was little changed at $1,294.91 per ounce.Oil prices eased as traders worried about the strength ofdemand in the United States after its gasoline stockpiles grewlast week more than analysts had expected. U.S. crude futures fell 38 cents to $51.93 perbarrel. Brent slipped 40 cents to $60.92.
($1 = 6.7560 Chinese yuan renminbi)<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Asia stock markets Asia-Pacific valuations The chips (makers) are down ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Wayne Cole in Sydney; Editing byCatherine Evans)