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Europe close: Stocks limp into the weekend

By Alexander Bueso

Date: Friday 17 Aug 2018

Europe close: Stocks limp into the weekend

(Sharecast News) - Stocks finished the week on a down note, with traders put off by renewed selling pressure on the Turkish currency, the lira, going into the weekend and wariness over what the final outcome of trade talks between China and the US will be, even as Wall Street moved back towards its record-highs overnight.
By the end of trading, the benchmark Stoxx 600 had edged lower by 0.10% or 0.37 points to 381.06, alongside a drop of 0.22% or 26.62 points to 12,210.55 for the German Dax and a drop of 0.53% or 108.86 points to 20,415.27 on the FTSE Mibtel.

In parallel, and despite news that a court in Izmir had denied US pastor Andrew Brunson's plea to be set free, the US dollar had trimmed its advance, rising 3.54% to 6.0406 against the lira.

Nevertheless, reports indicated that a higher court had yet to hand down a ruling.

Commenting on the current tensions between the US and Turkey, Michael Hewson at CMC Markets UK said: "The US doesn't appear in any mood to relieve the pressure on the Turkish government in securing the release of their pastor, if recent comments from vice President Mike Pence, and Treasury secretary Steve Mnuchin are any guide.

"President Erdogan may be able to defray some of the risks to the Turkish economy by trying to improving his ties with Germany and Russia, but if the US really wanted to turn the screws it's unlikely that these countries would be able to do much about it."

Against the Chinese yuan, the other main bug bear of global capital markets of late, the Greenback was little changed at 6.8775.

As an aside, a report from the US Pentagon overnight indicated that China had increased bomber operations and was probably training for strikes against it and its allies.

In the background, and regarding the outlook for markets, strategists at Bank of America-Merrill Lynch were pointing out to clients how the US S&P 500 was just four trading days away from entering into its longest 'bull' market ever.

However, there were plenty of global 'bear' markets in bond, commodity and equity markets about, they pointed out, and rightly so in their opinion, given that corporate profits and policy stimulus were set to "peak".

Hence, until the US central bank 'blinked' and the People's Republic of China eased policy in a big manner, they preferred retainng defensive, bearish trades.

Economic data was again light on the ground at the end of the week and largely in-line.

In particular, Eurostat confirmed that headline and core consumer prices in the euro area rose in July, hitting year-on-year rates of 2.1% and 1.1%, respectively, confirming preliminary estimates.

For its part, the European Central Bank reported that the single currency bloc's current account surplus slipped from May's upwardly-revised €24.4bn to €23.5bn.

In corporate news, shares of Air France fell following what some commentators termed a negative response from the unions to the company's decision to name Benjamin Smith, a Canadian, as its new boss and after its pilots in the Netherlands threatened to go on strike.



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