China warns of retaliation after Trump threatens fresh tariffs

By Andrea Shalal, Alexandra Alper and Huizhong Wu

BEIJING/WASHINGTON (Reuters) – China on Friday said it would not be blackmailed and warned of retaliation after U.S. President Donald Trump vowed to slap a 10% tariff on $300 billion of Chinese imports from next month, sharply escalating a trade row between the world’s biggest economies.

Trump stunned financial markets on Thursday by saying he plans to levy the additional duties from Sept. 1, marking an abrupt end to a truce in a year-long trade war that has slowed global growth and disrupted supply chains.

Beijing would not give an inch under pressure from Washington, Chinese Foreign Ministry spokeswoman Hua Chunying said.

“If America does pass these tariffs then China will have to take the necessary countermeasures to protect the country’s core and fundamental interests,” Hua told a news briefing in Beijing.

“We won’t accept any maximum pressure, intimidation or blackmail. On the major issues of principle we won’t give an inch,” she said, adding that China hoped the United States would “give up its illusions” and return to negotiations based on mutual respect and equality.

Trump also threatened to further raise tariffs if Chinese President Xi Jinping fails to move more quickly to strike a trade deal.

The newly threatened duties, which Trump announced in a series of tweets after his top trade negotiators briefed him on a lack of progress in talks in Shanghai this week, would extend tariffs to nearly all Chinese goods that the United States imports.

The president later said if trade discussions failed to progress he could raise tariffs further – even beyond the 25 percent levy he has already imposed on $250 billion of imports from China.

Senior Chinese diplomat Wang Yi told reporters on the sidelines of an Association of Southeast Nations event in Thailand that additional tariffs were “definitely not a constructive way to resolve economic and trade frictions”.

U.S. Secretary of State Mike Pompeo, who was also in Bangkok, decried “decades of bad behavior” by China on trade and said Trump had the determination to fix it.

The news hit financial markets hard. On Friday, Asian and European stocks took a battering and safe-haven assets such as the yen, gold and government bonds jumped as investors rushed for cover.

Retail associations in the United States predicted a spike in consumer prices, hitting consumer stocks on Thursday on Wall Street, where Target Corp tumbled 4.2%, Macy’s Inc fell 6% and Nordstrom Inc was down 6.2%.

Asked about the impact on financial markets, Trump told reporters: “I’m not concerned about that at all.”

Moody’s said the new tariffs would weigh on the global economy at a time when growth is already slowing in the United States, China and the euro zone.

The tariffs may also force the Federal Reserve to again cut interest rates to protect the U.S. economy from trade-policy risks, experts said.

CHINESE RETALIATION?

One Chinese official told Reuters it was not the first time Trump had “flip-flopped”, and that though the time between the talks being declared constructive and Trump’s threat of new tariffs was short, officials in Beijing were already prepared.

“Discussion followed by a fight has become the normal pattern,” the official said.

Possible retaliatory measures by China could include tariffs, a ban on the export of rare earths that are used in everything from military equipment to consumer electronics, and penalties against U.S. companies in China, analysts say.

So far, Beijing has refrained from slapping tariffs on U.S. crude oil and big aircraft, after cumulatively imposing additional retaliatory tariffs of up to 25% on about $110 billion of U.S. goods since the trade war broke out last year.

China is also drafting a list of “unreliable entities” – foreign firms that have harmed Chinese interests. U.S. delivery giant FedEx is under investigation by China.

“China will deliver each retaliation methodically, and deliberately, one by one,” ING economist Iris Pang wrote in a note.

“We believe China’s strategy in this trade war escalation will be to slow down the pace of negotiation and tit-for-tat retaliation. This could lengthen the process of retaliation until the upcoming U.S. presidential election,” Pang said.

FRUSTRATED

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin briefed Trump earlier this week on their first face-to-face meeting with Chinese officials since Trump met Xi at the G20 summit at the end of June and agreed to a ceasefire in the trade war.

“When my people came home, they said, ‘We’re talking. We have another meeting in early September.’ I said, ‘That’s fine, but until such time as there’s a deal, we’ll be taxing them,” Trump told reporters.

A source familiar with the matter said Trump grew frustrated and composed the tweets shortly after Lighthizer and Mnuchin told him China made no significant movement on its position.

Previous negotiations collapsed in May, when U.S. officials accused China of backing away from earlier commitments.

American business groups in China expressed disquiet over the latest round of U.S. tariffs. The U.S.-China Business Council said on Friday it was concerned the action “will drive the Chinese from the negotiating table, reducing hope raised by a second round of talks that ended this week in Shanghai”.

“We are particularly concerned about increased regulatory scrutiny, delays in licenses and approvals, and discrimination against U.S. companies in government procurement tenders,” said the U.S.-China Business Council’s President Craig Allen in an e-mail.

Ker Gibbs, the president of the American Chamber of Commerce in Shanghai, said that as market access in China “remains unnecessarily restricted”, the United States should continue its dialogue with Beijing, and “also work with like-minded countries to persuade China that fair and reciprocal trade and investment benefits all.”

CROPS AND DRUGS

Trump said Beijing had failed to fulfill promises to stop sales of the synthetic opioid fentanyl to the United States, which U.S. officials say was to blame for most of more than 28,000 synthetic opioid-related overdose deaths in the United States in 2017.

He also said Beijing had not followed through on a goodwill pledge to buy more U.S. agricultural products.

The U.S. Department of Agriculture on Thursday confirmed a small private sale to China of 68,000 tonnes of soybeans in the week ended July 25.

The United States also has yet to ease restrictions on U.S. companies’ sales to Chinese telecommunications giant Huawei, which Trump had pledged as a goodwill gesture to Xi after meeting at the G20 in Osaka.

(Reporting by Andrea Shalal, Alexandra Alper, Steve Holland, David Lawder, Tim Ahmann, Susan Heavey, Makini Brice, Nandita Bose and Jonathan Landay in Washington; and Huizhong Wu, Xu Jing, Stella Qiu, Se Young Lee, and Min Zhang in Beijing; and Brenda Goh in Shanghai; Writing by Ryan Woo and Michael Martina; Editing by Grant McCool, Shri Navaratnam and Alex Richardson)

Lucky 13? Stocks score longest run of monthly gains on record

Lucky 13? Stocks score longest run of monthly gains on record

By Marc Jones

LONDON (Reuters) – A dive in high-flying U.S. tech stocks on worries their boom may have peaked left investors wondering on Thursday whether the longest global equity bull run in living memory might be starting to splutter.

The caution was sparked by another Wall Street wobble involving a rotation from tech to financials which came just as the near 9-year global rally prepared to notch up another impressive milestone.

The world’s broadest equity gauge – the MSCI all-country index – was on course to finish November with its 13th straight monthly gain on Thursday – the longest winning streak in the index’s 30-year history. Lucky for some.

Though the celebrations were muffled by the tech problems – Samsung and China stocks had also taken another tumble in Asian trading [.SS] – the mood improved again in Europe.

Germany’s Dax <.GDAX> and France’s CAC 40 <.FCHI> both inched up for a third day, and though London’s FTSE <.FTSE> lagged as hopes of a breakthrough in Brexit negotiations pushed the pound higher again, Wall Street futures <ESc1> pointed to U.S. rebound later. [.N] [GBP/]

The latest Reuters global asset poll showed the majority of investors expect shares to keep rising. Robeco strategist Peter van der Welle was one of those, despite noting the market was “playing in extra time”.

“In the absence of a near-term recession trigger, current stretched equity valuations do yet not instil enough fear to change overall market direction,” he said.

Possibly feeding the tech concerns was a Morgan Stanley report earlier this week that the “super-cycle” in memory chip demand looks likely to peak soon.

Shares of Amazon.com <AMZN.O>, Apple <AAPL.O>, Google parent Alphabet <GOOGL.O> Facebook <FB.O> and Netflix <NFLX.O> slid between 2 percent and 5.5 percent on Wednesday. [.N] Asia’s bellwether Samsung <005930.KS> then slumped 4.3 percent to two-month lows.

Tech nerves were not just confined to stocks. Rocketing cryptocurrency Bitcoin <BTC=BTSP> dropped a cool $1,000 to a low of $9,250 before spending European hours pinballing between $9,700 and $10,100.

For perspective, though, the Nasdaq index is still up 26.8 percent so far this year, roughly 7 percentage points more than the MSCI world <.MIWD00000PUS>. For Bitcoin it is a mind-boggling 950 percent. http://tmsnrt.rs/2zJqD6m

“It is true that if you look at the world’s semiconductor sales on chart, their year-on-year growth appears to be peaking out,” said Hiroshi Watanabe, an economist at Sony Financial Holdings. “But if you look at what’s driving demand, it’s not just smart phones and actually a lot of things.”

DOLLAR IN THE DOLDRUMS

In the more mainstream FX markets, the U.S. dollar climbed to 112.25 yen <JPY=>, held its ground versus the euro <EUR> but fell to a two-month low of $1.3480 to the resurgent pound <GBP=>. Measured against major peers the dollar is headed for biggest monthly drop since July. [FRX]

The U.S. Senate took a step on Wednesday toward passage of tax legislation that is a top White House priority, setting up a likely decisive but finely-balanced vote later this week.

Investors also seem to have grown cautious about the outlook of the world’s biggest economy and there are growing signs that it certainly won’t be the only country raising interest rates.

J.P. Morgan Asset Management global head of rates David Tan predicted on Thursday that there will be some 1,000 rate hikes globally over the next decade.

“The current period of economic expansion has therefore been extraordinarily long, almost 10 years and counting, but we know that the days of super low global central bank rates are in the process of coming to an end,” he said.

Borrowing costs in Germany, the euro zone’s benchmark bond issuer, rose to their highest in just over two weeks. The 10-year U.S. Treasuries yield climbed too, reaching 2.3859 percent <US10YT=RR> to near this month’s high of 2.414 percent.

There was no market response after U.S. President Donald Trump nominated Carnegie Mellon University professor Marvin Goodfriend, viewed as a policy hawk, to be a member of the Federal Reserve Board of Governors.

Oil meanwhile moved higher again as OPEC meet in Vienna to debate an extension of the group’s supply-cut agreement.

While the Organization of the Petroleum Exporting Countries and key non-member Russia look set to prolong oil supply cuts until the end of 2018, they have signaled that they may review the deal when they meet again in June if the market overheats.

U.S. crude futures <CLc1> traded at $57.72 per barrel in European trade, up 1.4 percent, while Brent futures <LCOc1> rose 0.7 percent to just over $64 a barrel. [O/R]

(Reporting by Marc Jones; editing by Mark Heinrich)

World food prices climb in May, import bill to rise in 2017: FAO

FILE PHOTO: Canadian pork shoulders are being prepped on a butcher's counter at North Hill Meats in Toronto, Ontario, Canada on May 10, 2017. Picture taken on May 10, 2017. REUTERS/Hyungwon Kang/File Photo

ROME (Reuters) – Global food prices rose in May from the month before after three months of decline, and the world’s food import bill is set to jump in 2017, the United Nations food agency said on Thursday.

Higher values for all food goods except sugar lifted prices on international markets 10 percent above the same month last year, the Food and Agriculture Organization (FAO) said.

Rising shipping costs and larger import volumes are due to push the cost of importing food globally to more than $1.3 trillion in 2017, FAO said.

This would be a 10.6 percent rise over 2016’s import bill, despite broad stability in markets buoyed by ample supplies of wheat and maize and higher production of oilseed products.

Poor countries that rely on imports to cover their food needs, and part of sub-Saharan Africa are on course for an even faster rise in their import costs as they buy in more meat, sugar, dairy and oilseed products.

All food categories except fish are due to add to rising import bills, as robust growth in aquaculture in many developing countries increasingly manages to meet domestic demand.

FAO’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 172.6 points in May, up 2.2 percent from April.

FAO trimmed its forecast for global cereals output in the 2017-18 season to 2.594 billion tonnes, down 0.5 percent year-on-year. Global wheat production is expected to decline 2.2 percent after a record harvest last year.

(Reporting by Isla Binnie, editing by Steve Scherer and Crispian Balmer)

Global growth headed for six-year high: OECD

FILE PHOTO: Construction cranes are seen in downtown Los Angeles, California, U.S., May 22, 2017. REUTERS/Lucy Nicholson

By Leigh Thomas

PARIS (Reuters) – The global economy is on course this year for its fastest growth in six years as a rebound in trade helps offset a weaker outlook in the United States, the OECD forecast on Wednesday.

The global economy is set to grow 3.5 percent this year before nudging up to 3.6 percent in 2018, the Paris-based Organisation for Economic Cooperation and Development said, updating its forecasts in its latest Economic Outlook.

That estimate for 2017 was not only a slight improvement from its last estimate in March for 3.3 percent growth, but it would also be the best performance since 2011.

Yet despite this brighter outlook, growth would nonetheless fall disappointingly short of rates seen before the 2008-2009 financial crisis, OECD Secretary General Angel Gurria said.

“Everything is relative. What I would not like us to do is celebrate the fact that we’re moving from very bad to mediocre,” Gurria told Reuters in an interview.

“It doesn’t mean that we have to get used to it or live with it. We have to continue to strive to do better,” he added.

While recovering trade and investment flows were supporting the improving economic outlook, Gurria said barriers in the form of protectionism and regulations needed to be lifted to ensure stronger growth.

The improvement would also not be enough to satisfy people’s expectations for better standards of living and reduce growing income inequality, he said.

The OECD saw an improved global outlook even though it downgraded its estimates for the United States, despite a weaker dollar boosting exports and tax cuts supporting household spending and business investment.

The OECD forecast U.S. growth of 2.1 percent this year and 2.4 percent next year, down from estimates in March of 2.4 percent and 2.8 percent, respectively.

OECD chief economist Catherine Mann attributed the downgraded outlook to delays in the Trump administration pushing ahead with planned tax cuts and infrastructure spending.

The weaker U.S. outlook was offset by slightly improved perspectives for the euro zone, Japan and China.

EURO ZONE LOOKING BETTER

Boosted by firmer German growth, the euro zone economy was seen growing 1.8 percent both this and next year, up from 1.6 percent for both years.

Lifted by improving international trade in Asia and fiscal stimulus, Japanese growth was seen at 1.4 percent this year before slowing to 1.0 percent next year, both slightly raised from the OECD’s March estimates of 1.2 percent and 0.8 percent respectively.

The OECD also marginally nudged up its estimates for growth in China to 6.6 percent this year and 6.4 percent in 2018, boosted by stimulus spending.

That in turn was supporting strong imports and helping to fuel a revival in Asian trade. As a result, global trade volumes were seen growing 4.6 percent this year, nearly double the rate seen in 2016.

Among the risks to the OECD’s outlook, it warned that the growing divergence between monetary policy rates among the major central banks raised the chances for financial market volatility.

The OECD also saw a potential for “swift snap-back” in U.S. long-term interest rates when the Federal Reserve decides to reduce the size of its balance sheet, especially if it comes at a time of rising policy rates.

(Reporting by Leigh Thomas; Editing by Hugh Lawson)

World stocks retreat from record highs as valuations give cause for a pause

FILE PHOTO: Visitors looks at an electronic board showing the Japan's Nikkei average at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, February 9, 2016. REUTERS/Issei Kato/Files

By Vikram Subhedar

LONDON (Reuters) – Global stocks paused near record highs as worries over China’s banking system provided an excuse for investors to lock in some profits. The dollar was set for its best week of the year on bets the Federal Reserve will raise U.S. interest rates in June.

A dip on Wall Street overnight on signs of weak consumer spending and waning enthusiasm over the recovery in European corporate earnings has put MSCI’s gauge of world stock markets <.MIWD00000PUS> on track for its first weekly loss in four.

The index trades at now trades at more than 16 times forward earnings, according to Thomson Reuters data, and above its long-term average of 15.6 times.

U.S. stock futures <ESc1> were down another 0.2 percent on Friday.

“We’ve had a nervous twitch about China, over this week,” said Sean Darby, chief global equity strategist at Jefferies. “We’ve had a bit more of a regulatory overhang coming through in the financial system.”

China’s banking regulator this week launched emergency risk assessments of lenders’ new business practices, sources told Reuters, as Beijing extends its crackdown on shadow banking.

With corporate earnings seasons in the U.S. and Europe drawing to a close investors, focus is likely to shift back to central banks, particularly in the United States, where inflation pressures are growing.

U.S. data on Thursday showed producer prices rebounded more than expected last month, leading to the biggest annual gain in five years.

Combined with a tightening labor market, firming inflation backs market expectations that the Federal Reserve will raise interest rates at its meeting next month. The central bank has forecast two more increases this year after raising rates a quarter of a point in March.

The stronger fundamentals in the U.S. helped offset uneasiness over political turmoil after President Donald Trump abruptly fired FBI chief James Comey.

The dollar index, which tracks the currency against a basket of six major rivals, was flat on the day at 99.622 <.DXY>, but was up 1 percent for the week.

Sterling was steady on the day at $1.2886 <GBP=> after dropping to a one-week low on Thursday following the Bank of England’s decision to keep interest rates unchanged. Policymakers indicated that rates were unlikely to rise until late 2019.

EUROPE’S SWEET SPOT

In Europe, stock markets steadied this week. Company profits are expected to grow 20 percent in the first quarter, the best corporate results in a decade, according to Morgan Stanley.

Their outperformance this year against global peers remains intact, with the benchmark’s <.STOXX> 10 percent gains outpacing the 7 percent rise on the S&P 500 <.SPX>.

Greek stocks <.ATG> snapped a their longest winning streak in two decades.

“European stocks are still in the sweet spot of basking in the removal of political risk in Europe for the time being, though it is somewhat ironic that we could see a modest decline on the week as investors take stock,” said Michael Hewson, chief markets analyst at CMC Markets.

European equity funds pulled in a record $6.1 billion in inflows in the week to May 10, according to data from EPFR, with centrist Emmanuel Macron’s win in the French presidential election seen as a trigger.

Concerns over valuations are beginning to emerge. Credit Suisse strategists cut their rating on Spain, the euro zone’s top performing market for the year, to “underperform,” saying the strong earnings and economic momentum was moderating.

At the same time, the collapse in volatility across asset classes to multi-year or record lows, is tempting more investors into making bets that markets will remain calm given the brighter outlook for global growth.

Bank of America Merrill Lynch said its high-net-worth clients cut cash and resumed buying low-volatility exchange-traded funds.

Yields for the euro zone’s weaker borrowers, such as Italy, Portugal and Spain, were all also 1 to 3 basis points lower as investors awaited announcements of the volumes for expected bond sales next week by France and Spain.

Oil prices held recent gains as traders expected OPEC-led production cuts to extend beyond the middle of this year and as U.S. crude inventories fell to their lowest levels since February.

International Brent crude futures <LCOc1> were at $50.78 per barrel. U.S. West Texas Intermediate crude futures <CLc1> were at $47.85 per barrel, both little changed on the day.

(Reporting by Vikram Subhedar, editing by Larry King)

Brazil annual inflation in April likely hit lowest in nearly 10 years

FILE PHOTO: A woman looks on prices at a food market in Rio de Janeiro, Brazil, January 21, 2016. REUTERS/Pilar Olivares/File Photo

By Silvio Cascione

BRASILIA (Reuters) – Brazil’s annual inflation rate in April likely eased to its lowest level in nearly 10 years, which could help prod the central bank to make another steep interest rate cut this month, a Reuters poll showed on Monday.

The IPCA benchmark consumer price index was seen rising 4.10 percent in the 12 months through the end of April compared with a 4.41 percent increase in the year to the middle of the month, according to the median estimate of 26 economists surveyed. The data is due to be released on Wednesday.

Brazilian annual inflation has tumbled from a 12-year peak of 10.7 percent in January 2016 amid slack consumer demand stemming from a severe recession and the highest unemployment on record.

President Michel Temer has hailed the drop in inflation as evidence that his austerity agenda was putting Latin America’s largest economy on a solid footing for recovery.

As inflationary pressures have eased, the central bank has steadily cut its benchmark interest rate from 14.25 percent in October.

Last month, it slashed it by 100 basis points, taking it to 11.25 percent. It was the deepest cut to the rate in nearly eight years.

“The (inflation) numbers should strengthen the case for another 100 basis point cut this month,” said Leonardo Costa, an economist with the São Paulo-based consultancy Rosenberg & Associados.

On Monday, a central bank survey of economists forecast a central bank interest rate of 8.5 percent and 4 percent annual inflation by December.

In the month of April, consumer prices were expected to have increased 0.16 percent from March, slowing from a 0.25 percent rise in the previous month, according to the median of 28 forecasts in the Reuters poll.

Forecasts for the monthly inflation rate ranged between 0.12 percent and 0.27 percent, while estimates for the 12-month rate varied between 4.07 percent and 4.22 percent.

Housing and transportation prices probably fell in April, while education costs slowed their increase, according to economists in the Reuters poll.

A one-off cut in electricity rates also likely contributed to last month’s anticipated inflation slowdown, as the government reversed a tariff surcharge related to the Angra 3 nuclear power plant, economists said. The central bank, however, said last month that this drop, however sizable, should not have relevant implications for monetary policy.

(Reporting by Silvio Cascione Editing by W Simon)

Oil spill leaves commodities spinning, safe-havens shine

Investors look at an electronic board showing stock information at a brokerage house in Shanghai, China, March 7, 2016. REUTERS/Aly Song/File Photo

By Marc Jones

LONDON (Reuters) – A slump in oil prices to the lowest in almost six months rattled markets on Friday, prompting a rally in safe-haven bonds, the yen and gold and taking the shine off a record-breaking week for world stocks.

Bourses flinched in both Asia and Europe and Wall Street also looked set for a subdued start as investors, who had been expecting to spend the day mostly looking ahead to U.S. jobs data and Sunday’s French elections, were caught off guard.

Traders had had to duck for cover overnight as both Brent <LCOc1> and U.S. <CLc1> crude fell more than 3 percent amid record trading volumes on mounting concerns about global oversupply.

Things only fully stabilized when Saudi Arabia’s OPEC chief hit the wires in European hours, saying there was a growing consensus among oil pumping countries that they needed to continue to “rebalance” the market.

Brent clawed back to $46.86 a barrel almost two dollars better off than its overnight low, but the scars left it an eye-watering 6 percent lower than at the start of the week.

“The whole commodity complex has been affected by this and it could have some pretty big implications if it continues for much longer,” said Saxo bank’s head of FX strategy John Hardy.

“If you look at global risk appetite, equities have been pretty quiet and that feeds into FX as well if carries on and there is a risk switch.”

Big commodity price drops do not just have an immediate impact on financial markets either.

As was seen during a slump between 2014 and 2016, they cause major headaches for countries that rely on their revenues. They also unleash deflationary forces, but can help energy-importing economies, firms and households by lowering their energy bills.

Oil has not been the only commodity that has suffered this week. Chinese iron ore futures <DCIOcv1> fell almost 7 percent in Shanghai overnight after tumbling 8 percent on Thursday.

Mining giant Rio Tinto <RIO.L> hit a six-month low, Glencore <GLEN.L> was set for its worst weekly loss in two months and copper miner Antofagasta <ANTO.L> since December.

The Canadian dollar <CAD=>, the Australian dollar <AUD=> and Russia’s rouble <RUB=> – some of the world’s most commodity- sensitive currencies – were all sent spinning, falling respectively to 14-month, four-month and seven-week lows.

They all fought back, though, after the Saudi OPEC governor’s comments to Reuters that: “A six-month extension (to production cuts) may be needed to rebalance the market, but the length of the extension is not firm yet.”

Rio Tinto <RIO.L> hit a six-month low on Friday, and Glencore <GLEN.L> was set for its worst weekly losses in two months, while for copper miner Antofagasta <ANTO.L> since December

LE PEN TO THE SWORD?

In calmer waters, the euro <EUR=> touched a six-month high of almost $1.10 ahead of France’s weekend election, in which polls now expect centrist Emmanuel Macron to convincingly beat right-wing and anti-euro rival Marine Le Pen.

The gap between French and German 10-year government borrowing costs also hit a six-month low and despite the dip on the day, European shares <.STOXX> were heading for a healthy 1.2 percent rise for the week. World shares <.MIWD00000PUS> hit a record high on Wednesday.

“I think now this election is no longer an issue and the market is already starting to focus on new issues: inflation, the (euro zone) economy, and the U.S. data,” said DZ Bank strategist Daniel Lenz.

He was referring to U.S. non-farm payroll numbers due out at 1230 GMT (8:30 a.m. EDT) are expected to show 185,000 jobs were created in April following March’s underwhelming 98,000 figure.

The dollar <.DXY> and U.S. government bond yields <US10YT=RR> had both been nudged lower by the commodity market worries. It is set to be the fourth weekly fall on the trot for the greenback which is now at its lowest since November.

The yen <JPY=> and gold <XAU=> rose in tandem as investors took refuge in safe havens, though the latter remained on track for its biggest weekly decline in nearly six months on bets that U.S. interest rates will rise again in the coming months.

“I think the payrolls will be under consensus,” said fund manager Hermes chief economist Neil Williams.

“It fits with my view that the U.S. is going to peak out at a far lower interest rate than markets expect. The Fed’s dot plots says 3 percent, but I’m going closer to 1.5 percent.”

Emerging markets were also caught in the commodities sell-off. The main emerging currencies were all on track for weekly losses and MSCI’s closely-followed EM stocks index <.MSCIEF> hit a 10-day low.

China markets have also been wobbling in recent weeks but the commodity market woes have been the central focus.

Brent traded volumes on Thursday reached an all-time high of nearly 542,000 contracts, suggesting that big betting hedge funds may have been ripping out long positions.

“It is now-or-never for oil bulls,” said U.S. commodity analysis firm The Schork Report. “They either put up a defence here or risk further emboldening the bears for a run at the $40 threshold (for WTI).”

(Addition Reporting by Abhinav Ramnarayan, Veronica Brown and Helen Reid in London; Editing by Hugh Lawson and Ed Osmond)

World stocks pause near record highs ahead of Trump landmark

People walk through the lobby of the London Stock Exchange in London, Britain August 25, 2015. REUTERS/Suzanne Plunkett/File photo

By Vikram Subhedar

LONDON (Reuters) – Concern about global trade and U.S. President Donald Trump’s “America First” policies kept appetite for risky assets in check on Friday, setting world stocks on the path to a sluggish end to what will be their sixth straight month of gains.

In an interview with Reuters, Trump called the U.S. trade pact with South Korea “unacceptable” and said it would be targeted for renegotiation after his administration completed a revamp of the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Trump’s comments sent Seoul stocks <.KS11> and the won <KRW=> into reverse.

Global stocks <.MIWO00000PUS> were steady, however, little changed on the day and holding near all-time highs and on track for a sixth straight month of gains.

Stock futures on Wall Street <ESc1> were up 0.1 percent, also near their highest ever levels.

Saturday marks Trump’s 100th day in office and his attacks on free trade and scepticism about his administration’s ability to see through a tax and spending campaign promises has dented some of the enthusiasm in markets that followed his election win.

“Trump is reaching the 100-day mark with nothing to show for it and these recent comments just coincide with that. They (the U.S. administration) are finding it hard to push through fiscal plans and all this rhetoric is probably related,” Kiran Kowshik, strategist at Unicredit.

EUROPE POWERING AHEAD

The mood on Europe, however, remains upbeat.

Euro zone bond yields rose across the board on Friday and the euro strengthened, rising 0.6 percent against the dollar <EUR=> to $1.0944, as output data from several countries reaffirmed a picture of economic strength in the bloc.

At the same, inflation blew past expectations to hit a three-year high, keeping pressure on the European Central Bank to start dialing back its stimulus measures.

Regional banking shares <.SX7P> added to recent gains.

Barclays <BARC.L> shares were an outlier, however, sliding 5 percent after disappointing investment banking results and weighing on the broader STOXX 600 <.STOXX> index which fell 0.2 percent.

European stocks are still up more than 2 percent on the week. Bank of America Merrill Lynch (BAML) noted that the $2.4 billion of inflows into European equity funds over the past week were the highest since December 2015.

“The hard data for equities is earnings — and they are powering ahead. Q1 earnings season is very strong and revisions trends are positive and broad-based,” said analysts at BAML, who forecast 15 percent earnings growth for European companies and a further 8 percent rally for the STOXX 600.

Healthy earnings, particularly from companies closely geared to economic growth, have underpinned the rally in global stocks, which have added nearly $5 trillion to their market value so far this year, according to Thomson Reuters data.

In commodities, oil prices rose but were still on track for a second straight weekly loss on concerns that an OPEC-led production cut had failed to significantly tighten an oversupplied market.

U.S. West Texas Intermediate (WTI) crude <CLc1> was at $49.43 per barrel at 0649 GMT, up 46 cents, or 0.94 percent, from its last close. WTI is still set for a small weekly loss and is around 8 percent below its April peak.

Brent crude <LCOc1> was at $51.91 per barrel, up 47 cents, or 0.91 percent. Brent is around 8.5 percent down from its April peak and is also on track for a second, albeit small, weekly decline.

(Additional reporting by Sujata Rao, Editing by Jeremy Gaunt and John Stonestreet)

Cashless society getting closer, survey finds

FILE PHOTO: Samsung's new Samsung Pay mobile wallet system is demonstrated at its Australian launch in Sydney, June 15, 2016. REUTERS/Matt Siegel/File Photo

By Jeremy Gaunt

LONDON (Reuters) – More than a third of Europeans and Americans would be happy to go without cash and rely on electronic forms of payment if they could, and at least 20 percent already pretty much do so, a study showed on Wednesday.

The study, which was conducted in 13 European countries, the United States and Australia, also found that in many places where cash is most used, people are among the keenest to ditch it.

Overall, 34 percent of respondents in Europe and 38 percent in the United States said they would be willing to go cash-free, according to the survey conducted by Ipsos for the ING bank website eZonomics.

Twenty-one percent and 34 percent in Europe and the United States, respectively, said they already rarely use cash.

The trend was also clear. More than half of the European respondents said they had used less cash in the past 12 months than previously and 78 percent said they expected to use it even less over the coming 12 months.

Ian Bright, managing director of group research for ING wholesale banking, said he did not believe people would quit cash entirely, but the direction was obvious.

“More and more people will end up with a situation where they can quite comfortably get by for two days, three days, four days, even a week, without ever using cash,” he told Reuters Television.

Payment systems such as contactless cards and mobile-phone digital wallets have become so prevalent the issue has become political in some countries.

Cash-loving Germans, for example, have been concerned that a move by the European Central Bank to phase out the 500 euro note by the end of next year is the start of a slippery slope.

Germany is one of the countries that uses cash the most. The ING survey showed only 10 percent of Germans saying they rarely use cash, compared, for example, with 33 percent and 35 percent, respectively, in neighbors Poland and France.

The survey also showed that, in general, countries where cash is much in use were most likely to want to go cashless.

Only 19 percent of Italians said they rarely used cash but 41 percent said they would be willing to go cash. There was a similar trend in Turkey, Romania, the Czech Republic, Spain and even Germany.

(Editing by Catherine Evans)

Investors play safe as Syria tensions rise

Traders work on the floor of the New York Stock Exchange (NYSE) in the Manhattan borough of New York, New York, U.S., April 4, 2017. REUTERS/Brendan McDermid

By Marc Jones

LONDON (Reuters) – Nervous investors sought shelter in gold, Treasuries and the yen on Tuesday as growing tensions over Syria put the U.S. administration and Russia on a collision course.

European shares edged higher, reversing early falls, but Wall Street looked set to open lower, according to index futures <ESc1> <1YMc1>, as uncertainty over looming French presidential elections also simmered.

U.S. Secretary of State Rex Tillerson carried a unified message from world powers to Moscow, denouncing Russian support for Syria, after a meeting with foreign ministers of the Group of Seven major advanced economies and Middle East allies.

Western countries blame Syrian President Bashar al-Assad for last week’s deadly gas attack. U.S. President Donald Trump responded by firing cruise missiles at a Syrian air base. Russian President Vladimir Putin has stood by Moscow’s ally Assad, who denies blame.

Gold <XAU=> hit its highest since November, emerging market stocks <.MSCIEF> were on their worst run of the year so far, while the euro <EURJPY=> fell to a four-month low versus a broadly stronger Japanese yen. <JPY=> [FRX/]

“It’s a relatively modest reaction but there is a lot of geopolitical risk in global markets at the moment,” said TD Securities European head of currency strategy Ned Rumpeltin.

“There is Syria, there is more uncertainty about the U.S. economy after relatively weak jobs numbers and we have French elections coming up.”

The latest polls from France are providing another twist in the race for the presidency, with far-left candidate Jean-Luc Melenchon making ground against the rest of the pack before the first round of voting on April 23.

This has raised the possibility that Melenchon could square off against far-right leader Marine Le Pen – both of whom are eurosceptics – in the election’s decisive second round in May.

German Bunds yields dipped below 0.20 percent for the first time in more than five weeks, before edging higher, while French yields <FR10YT=TWEB> hit a one-week high of 0.96 percent leaving the gap between the two – a key gauge of investors’ concerns – at its widest in six weeks. [GVD/EUR]

“After Britain’s Brexit referendum and the U.S. presidential election surprised markets in 2016, could this event do the same?,” Mark Burgess, global head of equities at Columbia Threadneedle in London, wrote in a note.

Then pan-European STOXX 600 share index <.STOXX> eked out gains of 0.1 percent, led higher by miners <.SXPP> as the gold price rose. MSCI’s main index of Asia-Pacific shares, excluding Japan <.MIAPJ0000PUS> fell 0.2 percent. Emerging market shares were on track for their first four-day losing streak of 2017.

Gold <XAU=>, sought at times of global tension as a safe place to store wealth, last traded up 0.3 percent on the day at almost $1,258 an ounce. The precious metal hit a five-month high above $1,270 on Friday after the U.S. missile strike on Thursday.

The dollar fell 0.1 percent against a basket of other major currencies <.DXY>. The greenback weakened 0.4 percent to 110.53 yen <JPY=> and 0.2 percent to $1.0616 per euro <EUR=>. Sterling rose <GBP=D3> 0.2 percent to $1.2441.

Oil retreated from five-week highs hit earlier in the day as concerns about rising U.S. shale production offset a shutdown at Libya’s largest oilfield over the weekend and the U.S. strikes against Syria that had supported prices.

Global benchmark Brent <LCOc1> fell 4 cents to $55.94, breaking a six-session winning streak.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

(Additional reporting by Kit Rees, John Geddie, Ritvik Carvalho and Nigel Stephenson in London Editing by Keith Weir and Pritha Sarkar)