* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Sept 3 (Reuters) - Global stocks slipped toward a
recent two-month low on Tuesday, as U.S.-China trade tensions
drove investors to the relative shelter of gold, the Japanese
yen and government debt.
Sterling was the big mover in currency markets, nearing a
three-year low with British Prime Minister Boris Johnson set for
a showdown with Parliament over a no-deal Brexit.
With U.S. markets shut on Monday, global markets took their
cue from weak PMI survey data in Europe and China which raised
concerns the global economy was struggling on many fronts.
An index of global stocks .MIWD00000PUS slipped 0.2% on
Tuesday, heading towards a two-month low hit in early August. An
index of Asian stocks .MIAPJ0000PUS was down 0.7%.
In the trade war between Washington and Beijing, tensions
have shown little sign of abating even though U.S. President
Donald Trump has said they would meet for talks this month.
"Since the trade dispute has become the driving force behind
equity markets, we advise against adding significantly to equity
exposure, particularly for those with an adequate strategic
allocation," Mark Haefele, chief investment officer at UBS
Global Wealth Management said.
European stocks were on the back foot as investors locked in
profits from a three-day streak that saw indices scale near
one-month highs. An index of European stocks .MSER was down
0.3%.
DATA HOPES
The move away from equities boosted demand for government
debt with yields on benchmark U.S. Treasury debt tumbling to
towards a three-year low hit last week as investors also ramped
up their bets the global economy is headed towards a recession.
Market watchers are hoping that U.S. data would undermine
some of those bearish bets on the global economy with surveys
from the Institute for Supply Management due later in the day
while U.S. payrolls data is due on Friday.
"The ISM ... is going to be (a) particular important market
mover as those who have been buying bonds strongly, suggesting
that the U.S. is on course for recession, need to see some sort
of justification," said Andrew Milligan, head of global strategy
at Aberdeen Standard Investments.
The yield on 10-year U.S. Treasuries fell 2 basis points to
1.482% US10YT=RR , off a three-year low of 1.443% touched last
week. The yield dropped more than 50 basis points last month,
the biggest monthly drop since August 2011.
Keeping in line with a general mood of risk aversion, the
yen gained 0.2% against the greenback while gold XAU= firmed
towards more than a six-year high.
In the currency market, sterling slumped below $1.20 to a
three-year low, as Prime Minister Johnson's implicit ultimatum
to lawmakers to back him on Brexit or face an election sent
investors scrambling to dump British assets. GBP/
Oil prices were also dented by trade war concerns. U.S. West
Texas Intermediate (WTI) crude CLc1 lost 0.47% to $54.84 per
barrel. International benchmark Brent futures LCOc1 dipped
0.05% to $58.63 per barrel.
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