* MSCI World share index turns lower
* European shares falter after positive open
* Gold steady near $1,500/oz
* Yen shines due to safe haven demand
* Sterling near January 2017 lows vs dollar
*
By Marc Jones
LONDON, Aug 12 (Reuters) - Yen and bond bulls charged on
Monday while stocks struggled again, amid ongoing worries that a
prolonged U.S.-China trade war and damaging Brexit could tip top
economies into recession.
Early gains for Europe's main bourses had quickly
disappeared .EU and Wall Street futures were already in the
red .N after Asia-Pacific had also finished lower overnight
.MIAPJ0000PUS .
That was despite a more than 1% rally for Chinese stocks
.CSI300 after the yuan had avoided further drama CNY=PBOC
and financial regulators there had relaxed margin financing
rules late on Friday. .SS
Safety remained the name of the game. FX harbour, the
Japanese yen, hit its highest in nearly a year and a half at
105.32 yen against the dollar and gained against the euro
EURJPY= and Brexit-bruised British pound too GBPJPY= . /FRX
"Risk indicators and global markets have become more shaky
and the yen is reflecting those concerns, and safe-haven
shelters like the yen and the Swiss franc should continue to
benefit," said Commerzbank currency strategist Esther Reichelt.
In bond markets, the demand for guaranteed income was also
unrelenting. GVD/EUR A rally in Italy's debt gave it an extra
boost after Fitch kept country's rating steady despite the
prospect of snap elections in the euro zone's third biggest
economy now looming.
There were signs that League leader Matteo Salvini's call
for those snap elections was facing mounting resistance from
other parties whose support will be needed for the plan to
succeed. "Fitch kept Italy's rating unchanged and some market
participants may be betting that a snap election could be
delayed," said DZ Bank rates strategist Sebastian Fellechner,
referring to the fall in yields.
Economists are also watching for a batch of global data this
week. Goldman Sachs became the latest to cut its U.S. growth
forecast at the weekend, warning that a U.S. China trade deal
now looked unlikely before the 2020 U.S. presidential election.
One week ago, China allowed the yuan CNY=CFXS to break
through the key 7-per-dollar level for the first time since
2008, prompting Washington to label Beijing a currency
manipulator and sparking market ructions.
The International Monetary Fund said on Friday that it stood
by its assessment that the value of China's yuan was largely in
line with economic fundamentals. MESSAGES
On Friday, Wall Street snapped a three-day winning streak
after U.S. President Donald Trump said Washington was continuing
trade talks with Beijing, but that the U.S. was not going to
make a deal for now. Those comments helped to drive a late sell-off in a volatile
session that saw the Dow Jones Industrial Average .DJI fall
0.34%, the S&P 500 .SPX lose 0.66% and the Nasdaq Composite
.IXIC drop 1%.
White House trade adviser Peter Navarro subsequently said
that the United States was still planning to hold another round
of trade talks with Chinese negotiators. Wall Street futures were down 0.5%. ESc1
In commodities, oil prices dipped on growth and trade
worries, having risen sharply on Friday on a drop in European
inventories and production cuts by the Organization of the
Petroleum Exporting Countries.
International benchmark Brent crude futures LCOc1 were at
$58.16 a barrel by 0829 GMT, down 37 cents from their previous
settlement.
U.S. West Texas Intermediate (WTI) CLc1 futures were at
$53.89 per barrel, down 61 cents from their last close.
Both benchmarks fell last week, with Brent losing more than
5% and WTI falling about 2%.
"The market is facing a buyers' strike," said Michael Tran,
commodity strategist at RBC Capital Markets, noting the low
level of investors' long positions betting on higher prices.
"Despite the laundry list of disruptions and additional
barrels at risk, investor length is currently near a multi-year
low."
Argentina's markets were ready for a slump too after voters
soundly rejected President Mauricio Macri's austere economic
policies in primary elections at the weekend, raising serious
questions about his chances of re-election in October.
Argentina's 2028-maturing, euro-denominated government bond
XS1715303779=TE was down more than 11 cents in European
trading, Tradeweb data showed.
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