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Global Stocks Edge Up on Stimulus, Trade Hopes

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09/13/2019 | 08:57am EDT

By Avantika Chilkoti

-- Treasury yields rise

-- Some Asian markets closed for holiday

-- European bank shares gain

U.S. stock futures ticked up after China said it wouldn't impose new tariffs on U.S. soybeans, pork and other agricultural goods, a further sign of cooling tensions between the two largest economies.

Futures on the S&P 500 rose 0.3% and futures on the Dow Jones Industrial Average rose 0.4%.

China's move on Friday was the latest sign of progress in U.S.-China trade talks. On Thursday 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.

The Stoxx Europe 600 edged up 0.3% in midday 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 was London Stock Exchange Group after it rejected a $36.6 billion bid from the Hong Kong Exchange and Clearing Ltd. LSE shares were up 1.9%.

Other significant movers were Italy's Unione di Banche Italiane, known as UBI Banca, which was up 3%, Germany's Commerzbank, up 5%, and Spain's CaixaBank, which gained 6.74%. The Stoxx Europe 600's banking sector climbed 2.22%.

The yield on 10-year Italian government bonds ticked up to 0.847% from 0.844% on Thursday, while the yield on the equivalent German bund rose to minus 0.497% from minus 0.517%.

The yield on U.S. 10-year Treasurys rose to 1.794%, 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.

Investors were moving on growing signs that Parliament will block the U.K. from leaving the European Union without a deal next month, according to John Wraith, who covers U.K. rates strategy and economics at UBS.

"Boris [Johnson] seems increasingly boxed in, and the more his hands are tied, the less likely an exit against Parliament's wishes can be engineered," said Mr. Wraith.

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%
DJ INDUSTRIAL -0.11% 26787.36 Delayed Quote.14.96%
EURO / BRITISH POUND (EUR/GBP) -0.13% 0.8741 Delayed Quote.-1.50%
EURO / US DOLLAR (EUR/USD) -0.03% 1.10262 Delayed Quote.-3.99%
HANG SENG 0.87% 26520.49 Real-time Quote.1.72%
LONDON STOCK EXCHANGE PLC -0.03% 7298 Delayed Quote.79.71%
NASDAQ 100 -0.02% 7842.333734 Delayed Quote.22.28%
NASDAQ COMP. -0.10% 8048.649481 Delayed Quote.19.83%
NIKKEI 225 1.15% 21798.87 Real-time Quote.7.68%
S&P 500 -0.14% 2966.15 Delayed Quote.18.49%
SOYBEAN MEAL FUTURES (ZM) - CBE (ELECTRONIC)/C1 -1.61% 293 End-of-day quote.-4.31%
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%
UBS GROUP -0.32% 11.07 Delayed Quote.-12.38%
US DOLLAR INDEX 0.18% 98.48 End-of-day quote.1.86%
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