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World shares remain near record peaks

Stock Markets Dec 18, 2019 07:35AM ET
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© Reuters. The London Stock Exchange Group offices are seen in the City of London, Britain

By Dhara Ranasinghe

LONDON (Reuters) - World stocks remained just off record highs on Wednesday after climbing for five straight sessions, while Britain's pound nursed heavy losses as Brexit uncertainty returned.

European equities edged higher (STOXX) after falling the day before as Britain's Prime Minister Boris Johnson took a harder line on Brexit.

Earlier, Asian shares drifted down. Japan's Nikkei (N225) dipped 0.6% and China's stocks slipped (CSI300) even after Beijing trimmed another short-term interest rate.

U.S. equity futures (ESc1) (1YMc1) were up and MSCI's world stock index (MIWD00000PUS) stood just off record highs. It has rallied almost 23% this year, set for its best year in a decade and the fourth-best year ever.

A run of better data recently has helped calm fears of a recession while phase one of a Sino-U.S. deal on trade appears to have eased some of the uncertainty on the global outlook.

German business morale rose more than expected in December to a six-month high, the Ifo survey showed on Wednesday, suggesting that Europe's largest economy picked up steam in the fourth quarter.

"I expect markets to end the year quietly but mildly positively, especially if the PBoC does nibble down the lending interest rate later this week," said Chris Bailey European strategist at Raymond James, referring to China's central bank.

"Bigger challenges naturally await for next year ... but I think traders and investors will be happier to grapple with these actually in 2020."

NOT SO FAST

But it might be too soon to declare an all-clear on the political front. The Democratic-led House of Representatives in the United States is expected to vote on Wednesday for two articles of impeachment that charge President Donald Trump with abuse of power and obstruction of Congress.

Few expect the Republican-dominated Senate to convict Trump and force him from office, but the impeachment process could focus attention on next year's U.S. election risks.

In Britain, the Prime Minister Johnson says he will use the prospect of a Brexit cliff-edge at the end of 2020 to demand the EU give him a comprehensive free trade deal in less than 11 months.

Sterling slid 1.5% on Tuesday in its largest one-day fall this year as fears of a hard Brexit resurfaced

The pound was last down 0.3% at $1.3094 , giving p all the gains made since the Conservative Party's election victory last Thursday. [GBP/]

"This is a correction of the election euphoria, slowly but surely, as the realization sets in that this whole Brexit drama is not over yet and just another deadline of a hard Brexit will be looming eventually at the end of the year," said Thu Lan Nugyen, FX strategist at Commerzbank (DE:CBKG).

Analysts said Thursday's central bank meetings in Britain, Japan, Sweden and Norway could bring some volatility.

Sweden's central bank is expected to become the first in the world to claw its way out of negative interest rates on Thursday, with analysts expecting a rise in the benchmark repo rate to zero from -0.25%.

The euro was down a fifth of percent at $1.1127 (EUR=) and Japan's yen was little changed at 109.49 per dollar .

The Turkish lira reached its weakest level against the dollar in more than two months after the U.S. Senate passed legislation with provisions to punish Ankara, raising concern about already strained ties with Washington.

It has lost more than 11% this year after a currency crisis chopped its value by 30% in 2018.

Elsewhere, oil prices fell from three-month highs as data showed U.S. crude stocks rose unexpectedly in the most recent week. U.S. crude (CLc1) fell 0.7% to $60.51 a barrel. Brent crude (LCOc1) futures lost 0.4% to $65.83. [O/R]

World shares remain near record peaks
 

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Notvery Goodathis
Peteymcletey Dec 18, 2019 8:24PM ET
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Global bubble.
 
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