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European stocks recover, pound falters

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The UK pound has continued to fall following the Brexit. PHOTO:AFP<br />

European stock markets recovered Tuesday but concerns about the Huawei row and broader China-US trade war kept investors on edge.

The pound meanwhile tumbled on lingering Brexit turmoil.

Against sterling, the European single currency reached a three-month high at 87.89 pence.

The pound also hit a four-month low at $1.2685.

European shares had fallen heavily Monday, as did New York’s tech-rich Nasdaq, after Google said it was beginning to sever ties with Chinese telecoms giant Huawei, days after US President Donald Trump’s decision to ban it from the American market.

The Huawei development — with the US citing national security concerns — has muddied the waters in the tariffs stand-off between Washington and Beijing, which was thought to have been close to the conclusion at the start of the month.

And now some observers are warning that stalled talks between the economic superpowers might not see any progress before a hoped-for meeting between Trump and Chinese counterpart Xi Jinping at the G20 summit in June.

“The market was a little optimistic that a trade deal would just get done here this month,” Brett Ewing, chief market strategist at First Franklin Financial Services, told Bloomberg News.

Dealers have “definitely come to terms with a longer term trade negotiation process”.

While the Commerce Department issued a 90-day reprieve on the ban on dealing with Huawei, saying breathing space was needed to avoid huge disruption, the two appear to be digging their heels in.

The developing crisis had a mixed impact on Asia’s tech firms, with Samsung Electronics, a rival to Huawei in the smartphone market, rallying 2.7 percent.

Analysts say the US ban will damage Huawei’s ability to sell phones outside China, offering Samsung a chance to consolidate its position at the top of the global market.

– Pound suffers again –
The pound suffered further on Tuesday as British Prime Minister Theresa May struggles to get opposition Labour backing for her Brexit deal, meaning it is likely to fail on her fourth attempt to pass it through parliament next month.

There is growing concern May will step down if she loses again, leaving the path open for a hardliner who is keen for a no-deal divorce, which many experts say will be economically destructive.

In commodities trading, oil prices rose after major producers said supplies were sufficient and stockpiles still rising, but gains were capped by China-US tensions.

– Key figures around 1030 GMT –
London – FTSE 100: UP 0.7 percent at 7,361.46 points

Frankfurt – DAX 30: UP 1.1 percent at 12,167.35

Paris – CAC 40: UP 0.6 percent at 5,391.08

EURO STOXX 50: UP 0.7 percent at 3,393.11

Tokyo – Nikkei 225: DOWN 0.1 percent at 21,272.45 (close)

Hong Kong – Hang Seng: DOWN 0.5 percent at 27,657.24 (close)

Shanghai – Composite: UP 1.2 percent at 2,905.97 (close)

New York – Dow: DOWN 0.3 percent at 25,679.90 (close)

Pound/dollar: DOWN at $1.2698 from $1.2725 at 2050 GMT

Euro/pound: UP at 87.84 pence from 87.72

Euro/dollar: DOWN at $1.1151 from $1.1165

Dollar/yen: UP at 110.21 yen from 110.04 yen

Oil – Brent Crude: UP 36 cents at $72.33 per barrel

Oil – West Texas Intermediate: UP 42 cents at $63.52 per barrel


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