European shares rise; EU leaders begin recovery fund talks

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVhFor
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(Updates prices and commentary throughout, adds chart)
By Elizabeth Howcroft
LONDON, June 19 (Reuters) - The dollar recovered overnight
losses and European stocks rose on Friday, on track to end the
week stronger, as investors re-evaluated the optimism that saw
markets rally in May and early June.
New COVID-19 infections continue to climb, making markets
cautious about the possibility of a second wave of the virus.
Mainland China reported 32 new coronavirus cases by the end of
June 18, 25 of them in the capital city, Beijing. Infections
also rose in the United States this week. The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was up 0.2% at 1050 GMT, its third day
in a row of broadly flat trading.
European stocks rose, with the Stoxx 600 up 1% .STOXX .
"We're a little bit stuck now in this risk-on risk-off
mood," said Ulrich Leuchtmann, head of FX and commodity research
at Commerzbank.
"We had very much of a risk-on move in May and early June,
this has reversed now and the big question is how much should
the market reverse it," he said.
Oil rose to above $42 a barrel on Friday, adding to gains in
the previous session, after OPEC producers and allies promised
to meet supply cuts and signs of demand, hit by the coronavirus
crisis, recovering. Brent crude LCOc1 rose $0.86, or 2.1%, to $42.37 by 1100
GMT, the highest since June 8. U.S. West Texas Intermediate
(WTI) crude CLc1 climbed $1.01, or 2.6%, to $39.85.
The dollar slipped overnight but recovered those losses in
London trading and was still heading for its best week in a
month. Against a basket of currencies =USD it was at 97.494,
up less than 0.1% on the day.
European Union leaders began the process of approving a 750
billion-euro stimulus package for their coronavirus-ravaged
economies on Friday. The leaders are still divided over its
final size and terms, but officials and diplomats hope a deal
will be struck in July. European Central Bank President Christine Lagarde told EU
leaders during the meeting that their economy was in a "dramatic
fall" and called on them to agree their recovery plan quickly,
diplomatic sources and officials said. "There's little hope for an agreement on the recovery fund
any time soon," said Marshall Gittler, head of investment
research at BDSwiss.
"The issue will have to be thrashed out at a later summit,
possibly next month, although one hasn't been scheduled yet.
Remember that agreement has to be unanimous on these issues, so
even tiny Austria can in effect veto the German-French
proposal."
The euro held near two-week lows at $1.12005, broadly flat
on the day. It rallied when the fund was first proposed by
France and Germany last month but has slipped this week as
uncertainties mounted over whether the plan can be delivered.
Demand for safe German government debt was little changed,
with the benchmark 10-year Bund yield at -0.411% DE10YT=RR .

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