(Refreshed top, adds comments)
* European stocks open sharply higher, FTSE helped by weak
* Pound down 0.5% as no deal Brexit risks rise
* Japan's Nikkei falls, Chinese shares in red
* Currency market action muted
* Oil falls 1.2% after Saudi price cuts
LONDON, Sept 7 (Reuters) - World shares inched higher led by
Europe on Monday, after last week's rout in U.S. technology
stocks that saw $2.3 trillion in value wiped off in two days
with investors taking note of lofty valuations when the global
economy is still in a recession.
Market activity was likely to remain subdued for the rest of
the day with the U.S. closed for the Labor Day holiday, though
Nasdaq futures fell a further 1%.
"This market rally may likely pause given stretched
valuations," said Stephane Ekolo, an equity strategist at TFS
Derivatives in London. "If earnings do not improve materially,
investors might well need to buckle up and expect a correction."
European bourses, which have fewer technology stocks
compared with the United States, started the week in the black,
driven by a 1.6% gain in Germany's DAX and London's
UK bluechip stocks, many of which derive much of their
profits overseas, were also helped by a falling pound, with
Brexit talks plunging into crisis following Britain's threat to
override its EU divorce deal. Sterling fell around half
a percent against the dollar and euro on Monday.
"It is almost inevitable that the perceived probability of
'no deal' will escalate over the coming weeks," Goldman Sachs
analysts wrote in a note.
The tech sell-off showed no signs of abating as Tesla
, the poster child of the euphoria in U.S. big
technology stocks, fell 4.5% in Frankfurt after it was excluded
from a group of companies that were being added to the S&P
U.S.-heavy MSCI world shares index was up
0.3%. The index had hit a record high last week, driven by
unprecedented central bank stimulus, but the rally fizzled out
last week amid worries over heady valuations and a patchy
"Our risk indices have begun to turn from their euphoria
highs," Jefferies said, adding that it was switching its
weighting on the MSCI All-World index to "tactically bearish" in
the short term.
"On the balance of probabilities, last week's correction has
further room to go."
In Asia, China's blue-chip index slipped 2.3% as
the possible U.S. blacklisting of China's largest chip maker,
Semiconductor Manufacturing International Corp (SMIC),
hit tech firms across the board.
The mood across Asian markets was tentative. MSCI's broadest
index of Asia-Pacific shares outside Japan was
last down 0.2% after two straight days of losses toppled it from
a 2-1/2-year peak last week.
Data earlier on Monday showed Chinese imports fell 2.1% in
August from a year earlier, confounding expectations for a 0.1%
increase, in a sign of sluggish domestic demand. Exports jumped
by a larger-than-expected 9.5%.
Japan's Nikkei fell 0.5% with SoftBank
coming under heavy selling pressure following media reports it
has spent at least $4 billion buying call options on listed U.S.
In currency markets, the dollar index gained 0.1% in
holiday-thinned trade on Monday, while traders shifted their
focus to the European Central Bank's meeting on Thursday. Most
analysts don't expect a change in policy stance.
The dollar was flat against the yen at 106.28 ahead
of a heavy week of macroeconomic data with figures on household
spending, current account and gross domestic product due on
The message the ECB will deliver on its inflation forecasts
is likely to set the direction for the euro, which has surged in
the past few months.
European government bonds yields rose across the board on
Monday on signs of an improved global economy and ahead of a
week of healthy supply, as countries seek bond markets to help
fund the response to the COVID-19 crisis.
In commodities, oil prices hit their lowest since July,
after Saudi Arabia made the deepest monthly price cuts for
supply to Asia in five months. U.S. crude fell 1.3% to
$39.25 a barrel. Brent crude skidded to $42.11.
Fading optimism about a recovery in demand amid the
coronavirus pandemic also hung heavy.
(Reporting by Thyagaraju Adinarayan in London; Editing by Ed
Osmond and Alex Richardson)