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GLOBAL MARKETS-Earnings lift shares, gains pared by U.S. election caution

Stock MarketsOct 23, 2020 21:00
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* European stocks boosted by Q3 earnings
* But still set for worst week in a month
* Britain, EU meet for Bexit talks
* U.S. debate creates few surprises
* Graphic: 2020 asset performance
* Graphic: World FX rates in 2020

By Tom Arnold
LONDON, Oct 23 (Reuters) - European shares rallied on
Friday, buoyed by positive earnings, but gains were limited by
investor caution less than two weeks before the U.S.
presidential election and with conflicting signs of progress in
stimulus talks in Washington.
The final debate between U.S. President Donald Trump and his
Democratic challenger Joe Biden on Thursday offered few
surprises and little new direction.
European stocks .STOXX were up 1%, heading for their best
day in five trading sessions, but still set for their worst week
in a month. Strong third-quarter results offset key business
survey data showing patchy recoveries in Germany and France.
Britain's main stock index .FTSE rose 1.5% in its best day
since early September after Barclays BARC.L reported
stronger-than-expected third-quarter earnings and last month's
British retail sales beat expectations. The chief negotiators for Britain and the European Union
meet on Friday for talks on a last-gasp trade deal to avert a
tumultuous finale to the five-year Brexit crisis. U.S. S&P 500 futures ESc1 were up 0.3%, after dipping
following the debate where Biden again criticized Trump's
handling of the coronavirus pandemic and Trump levelled
unfounded corruption accusations at Biden and his family.
The underlying index had gained about 0.5% the day before on
hopes the U.S. Congress and the White House would soon strike a
deal on another round of COVID-19 stimulus.
"There is no reason for markets to take big long positions
as we have the election in less than 10 days," said Francois
Savary, chief investment officer at Swiss wealth manager Prime
Partners. "Combined with COVID-19 uncertainty it's a time where
people will take a step back and wait for election developments
before taking a bet on the markets."
In Asia-Pacific, MSCI's broadest index of the region's
shares outside Japan .MIAPJ0000PUS was flat, while Japan's
Nikkei .N225 ticked up 0.2% and the CSI300 index of mainland
China .CSI300 shed 1.3%.
The MSCI world equity index .MIWD00000PUS , which follows
shares in nearly 50 countries, was up 0.2%, but set for its
biggest weekly fall in a month.
Biden's widening lead in polls is prompting many investors
to bet on his presidency and a "blue sweep", where Democrats win
both chambers of Congress.
While Democrats' plans to raise corporate and capital gains
taxes could hit share prices, their promise of large stimulus is
seen as mitigating the impact.
Clean energy is seen as a potential winner at the expense of
conventional energy under Biden, who has pledged to target
net-zero emissions by 2050. The Dow Jones oil and gas index
.DJUSEN is down nearly 49% this year.
The Nasdaq index .IXIC , which had led the market's rally
this year, has underperformed lately, losing 1.4% so far this
week, on concern Democrats will take a harder stance on big tech
Expectations of bigger government stimulus have also boosted
U.S. borrowing costs. The 10-year U.S. Treasuries yield
US10YT=RR hit a four-and-a-half-month high of 0.870% on
Thursday and last stood at 0.865%.
U.S. House of Representatives Speaker Nancy Pelosi reported
progress in talks with the Trump administration for another
round of financial aid, but Senate Republicans remained
skeptical of a possible deal. In the euro zone, Italian 10-year bond yields dropped 4
basis points to 0.767% as investors seemed confident an S&P
Italy ratings review late on Friday will not lead to a
downgrade. In currency markets, the dollar was 0.2% lower against a
basket of currencies =USD early in Europe, shy of a seven-week
low hit on Wednesday.
The euro EUR= ticked up 0.3% against the dollar, as was
sterling at $1.3084. The Chinese yuan CNY= also held its ground against the
dollar after an official at China's foreign exchange regulator
said it has been more stable than expected, suggesting
authorities are not too worried about its recent rise.
Oil prices gained. O/R Brent futures LCOc1 added 0.5% to
$42.68 per barrel. U.S. crude futures CLc1 gained 0.5% to
$40.84 per barrel.
Spot gold XAU= rose 0.4% to $1,911.14 per ounce. GOL/

Global assets
Global currencies vs. dollar
Emerging markets
MSCI All Country Wolrd Index Market Cap

GLOBAL MARKETS-Earnings lift shares, gains pared by U.S. election caution

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