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Global Stocks Edge Up on Stimulus, Trade Hopes

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09/13/2019 | 06:21am EDT

By Avantika Chilkoti

-- Treasury yields rise

-- Some Asian markets closed for holiday

-- European bank shares gain

Global stocks ticked higher Friday as investors digested news of fresh stimulus from the European Central Bank and signs that the deadlock in U.S.-China trade talks could be broken.

The Stoxx Europe 600 edged up 0.1% in morning trade. The relative quiet came after a volatile day for European stocks on Thursday, when the ECB launched a long-awaited package of stimulus measures, including an interest-rate cut and a renewed program of bond purchases, known as quantitative easing.

Moritz Sterzinger, a director at financial-advisory firm JCRA, flagged concerns that further quantitative easing might have limited impact on growth and inflation, given that interest rates are in negative territory.

He questioned: "How big are the diminishing returns to monetary stimulus, and how effective are additional rate cuts and another round of quantitative easing going to be in terms of stimulating the economy?"

The ECB also set plans on Thursday for a new two-tiered system for charging interest on the deposits held by eurozone banks, in an effort to ease some of the losses lenders face as rates dip further into negative territory. The central bank set up an updated lending program.

Analysts at Rabobank said the new measures are good news for banks and "unequivocally positive" for those in the periphery of the eurozone in particular.

Among the biggest gainers in Europe on Friday were Italy's Unione di Banche Italiane, known as UBI Banca, which was up 2.5%, Germany's Commerzbank, up 3.7%, and Spain's CaixaBank, which gained 4.6%. The Stoxx Europe 600's banking sector climbed 1.8%.

The yield on 10-year Italian government bonds ticked up to 0.917% from 0.8437% on Thursday, while the yield on the equivalent German bund rose to minus 0.496% from minus 0.517%.

The yield on U.S. 10-year Treasurys rose to 1.799%, from 1.789% on Thursday. Bond yields and prices move in opposite directions.

In Asia, Hong Kong's Hang Seng Index rallied 1% and Japan's Nikkei was up 1.1%. Markets in China, Korea and Taiwan were closed for a holiday.

On the trade front, The Wall Street Journal reported Beijing was making efforts to narrow the scope of negotiations with the U.S., separating issues like national security that have held up the talks. That came after President Trump on Wednesday postponed new tariffs that were set to be imposed on $250 billion of Chinese imports from Oct. 1.

In currencies, the British pound climbed 0.9% against the U.S. dollar, a day after local papers reported that the Democratic Unionist Party had suggested it would accept Northern Ireland keeping some European Union rules in place after Brexit, which could ease a major sticking point.

The WSJ Dollar Index, which measures the currency against a basket of its peers, slipped 0.3%.

Later in the day, investors will be watching for fresh retail sales data from the U.S., as well as a measure of consumer confidence. Economists forecast retail sales grew 0.2% in August, after ticking up 0.7% in July.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CAIXABANK, S.A. -0.59% 2.519 End-of-day quote.-19.91%
COMMERZBANK AG 0.69% 5.232 Delayed Quote.-10.15%
EURO / BRITISH POUND (EUR/GBP) -0.12% 0.87315 Delayed Quote.-1.50%
EURO / US DOLLAR (EUR/USD) 0.01% 1.10256 Delayed Quote.-3.99%
HANG SENG 0.87% 26520.49 Real-time Quote.1.72%
NIKKEI 225 1.15% 21798.87 Real-time Quote.7.68%
STOXX EUROPE 600 -0.49% 389.69 Delayed Quote.13.36%
STOXX EUROPE 600 NR -0.49% 838.91 Delayed Quote.16.43%
UBI BANCA 0.15% 2.746 End-of-day quote.4.50%
US DOLLAR INDEX 0.18% 98.48 End-of-day quote.1.86%
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