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Europe close: Restart of China-US trade talks boosts shares

By Alexander Bueso

Date: Thursday 16 Aug 2018

Europe close: Restart of China-US trade talks boosts shares

(Sharecast News) - Stocks on the Continent recovered some of the previous day's losses on Thursday, with the exception of Italian issues, buoyed by news that Chinese and US negotiators will restart talks aimed at resolving their trade stand-off.
At the invitation of the US, China's vice commerce minister, Wang Shouwen, will travel to Washington in late August and hold talks with his American counterparts, marking the first official contacts in two months.

Following the announcement, Mohammed El-Erian, chief economic adviser for Allianz, put the odds of reduced tensions at 60.0%.

Against that backdrop, the benchmark Stoxx 600 was up by 0.46% or 1.73 points at 381.43, alongside an advance of 0.61% or 74.16 points to 12,237.17 for the German Dax.

Milan's FTSE Mibtel on the other hand finished 1.83% or 382.22 points lower at 20,524.13, pushed lower by the sharp rise in the country's 10-year government bond yields during the previous session, with the Milan bourse having remained shut on Wednesday in observance of the Ascension Day holiday.

Nevertheless, not all observers were quite as confident as El-Erian, with IG's Joshua Mahony telling clients: "While trade talks with China are set to resume later this month, there is likely to be a degree of scepticism over their ability to strike a deal given the already abrasive tone taken by economic advisor Kudlow today."

The IG analyst was referring to US national economic council chief, Larry Kudlow's, remarks to CNBC earlier that same day.

Kudlow told the US broadcaster, "The Chinese government, in its totality, must not underestimate President Trump's toughness and willingness to continue this battle to eliminate tariffs and nontariff barriers and quotas, to stop the theft of intellectual property and to stop the forced transfer of technology."

Even so, the Chinese yuan was making small inroads against the US dollar, with the Greenback trading down by 0.71% to 6.8853 against the Asian currency.

The US dollar was holding lower against the Turkish lira too, shedding 1.56% to stand at 5.85, although it was off its earlier lows on the heels of remarks by US Treasury Secretary Steve Mnuchin, who reportedly threatened more sanctions is jailed US pastor Andrew Brunson was not released.

The economic calendar in the euro area was light on Thursday.

Nevertheless, and as expected, Norway's central bank kept its main policy interest rate unchanged at 0.5%.

Meanwhile, Eurostat reported that, in seasonally-adjusted terms, the Eurozone's trade surplus shrank to €16.7bn in June from €16.9bn in May (consensus: €16.9bn), amid big increases in both exports and imports versus the prior month.

Worth noting, investors seemed to brush-off substantially weaker-than-expected readings on US housing starts and the Philly Fed's manufacturing sector gauge for August.

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