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MSCI's All Country World Index <.MIWD00000PUS>, which tracks
stocks in 47 countries, was higher by 0.05% by midday in London,
up for a fourth straight day. Futures <ESc1> indicated a lower
open for stocks on Wall Street.
Stocks had rallied globally on Monday after the United States
postponed imposing another round of tariffs on Chinese products
and the two countries agreed to continue negotiations on trade.
But investors were skeptical of further gains for equities after
discouraging manufacturing surveys in the past 24 hours and a
U.S. threat of additional tariffs on European goods.
(Graphic: Manufacturing slowdown - https://tmsnrt.rs/2FMzK82)
"It's clear that the tariffs already in place will continue to
take a toll on global and domestic growth, and with Trump now
turning his attention on Europe, the early bullish bias seems to
ease again," said Konstantinos Anthis, head of research at ADSS.
The pan-European STOXX 600 index was up 0.25%, although plane
maker Airbus <AIR.PA> dropped as much as 1% as the United States
stepped up pressure in the long-running dispute over aircraft
subsidies.
The U.S. Trade Representative's office released a list of
additional products - including olives, Italian cheese and
Scotch whiskey - that could be subject to tariffs, on top of
products worth $21 billion that were announced in April.
"We've got the trade spat resurfacing between the U.S. and EU,
which is reiterating Trump's protectionist stance on trade, and
that is obviously not the kind of news you want to hear," said
Florian Hense, European economist at Berenberg in London.
"The uncertainty about what could still come on trade causes
confidence to fall and investors to hold back on their
investment, which is a driver in markets today."
Earlier, MSCI's broadest index of Asia-Pacific shares outside
Japan <.MIAPJ0000PUS> added 0.39%, helped by a 1.17% gain in
Hong Kong shares <.HSI> as investors caught up to Monday's
global rally. Markets in Hong Kong had been closed on for a
holiday.
But Chinese blue chips <.CSI300> were flat and Korean shares
<.KS11> lost 0.36%. Japan's Nikkei <.N225> finished up 0.11%.
Australian shares <.AXJO> were flat, pulling back from earlier
gains after the Reserve Bank of Australia cut its benchmark
interest rate by 25 basis points to a record low 1.0%, as
expected. However, the RBA left limited room for more cuts,
raising the possibility of unconventional policy easing.
The Australian dollar <AUD=> pulled up from recent lows to gain
0.4% against the U.S. dollar at $0.6992.
The safe-haven yen strengthened against the dollar, which fell
0.2% to 108.25 yen per dollar <JPY=>.
The dollar index, which tracks the dollar against major rivals
<.DXY>, was 0.1% lower at 96.749.
The euro got a brief boost after a media report that European
Central Bank policymakers are in no rush to cut interest rates
at a July policy meeting.
The single currency <EUR=EBS> edged up as much as 0.25% to the
day's highs at $1.1322 before retracing some of its rise to
stand 0.1% up on the day at $1.1300.
In debt markets, Italian government bonds rallied after Italy
cut its 2019 budget deficit target to avoid European Union
disciplinary action, potentially easing another major concern
for markets.
Oil prices slipped as concerns that the global economy could be
slowing outweighed an agreement by producer club OPEC on Monday
to extend supply cuts until next March.
Brent crude <LCOc1> fell 0.34% to $64.84 per barrel. U.S. crude
<CLc1> fell 0.3% to $58.92 a barrel.
Spot gold <XAU=> added over half a percent to $1,392.36 per
ounce.
(Reporting by Ritvik Carvalho, additional reporting by Andrew
Galbraith in Shanghai and Amy Caren Daniel in Bengaluru, editing
by Larry King)
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