* European shares and Italy and Greece bonds rally on Rome
pact
* Yields on US 30-yr, German 10-yr bonds edge up off record
lows
* Gold near 6-year high, silver shines
* Pound groggy after UK parliament suspension plans
* Argentina says wants to restructure chunk of debt
By Marc Jones
LONDON, Aug 29 (Reuters) - Signs that Italy's latest
political drama was over and hopeful noises from Beijing in the
trade war pushed Europe's share markets higher on Thursday and
paused the relentless steamrollering of global bond yields.
There was still plenty for bearish investors to chew on,
however: A sudden rush from Argentina to restructure its debt
thrust emerging market risk back into the spotlight, global
recession worries simmered, and the pound was groggy after
another Brexit-related tumble.
Nevertheless, European shares rose nearly 1% early on led by
a 1.7% jump in Italy .FTMIB where the government's bond market
borrowing costs also rallied to record lows.
That was after the country's 5-Star Movement and opposition
Democratic Party said they would try to form a coalition,
setting aside years of hostility to avert a snap election and
the economic uncertainty that comes with it.
The two sides still need to agree on a shared policy
platform and a team of ministers, but 5-Star chief Luigi Di Maio
and his PD counterpart Nicola Zingaretti said they had pledged
to find common ground for the good of the country.
"We love Italy and we consider it worthwhile to try this
experience," Zingaretti told reporters. Speaking shortly
afterwards, Di Maio said: "We made commitments to the
Italians...and come what may we want to fulfil them."
There was little reaction from the euro but there was barely
any currency market action generally. /FRX
The Japanese yen JPY= was a touch higher heading for its
biggest monthly rise since May, while sterling was flirting with
a January 2017 low of $1.2015 against the dollar after Prime
Minister Boris Johnson's plan on Wednesday to suspend Britain's
parliament increased no-deal Brexit nerves.
China's yuan CNY=CFXS had dipped for an 11th straight
session although a firmer-than-expected central bank fixing
helped stem deeper losses and against a basket of currencies
.DXY the dollar was steady around 98.190.
On the latest trade war development, China said it and the
United States were discussing the next round of face-to-face
trade talks in September and voiced hopes that U.S. President
Donald Trump would cancel plans for additional trade tariffs.
In the latest tit-for-tat escalation of the trade war
between the world's two largest economies, Trump last Friday
announced additional duties of 5% on targeted Chinese imports
worth about $550 billion to be imposed in stages from Sept 1 to
mid-December. The announcement came hours after China had unveiled
retaliatory tariffs on $75 billion worth of U.S. goods.
"The most important thing at the moment is to create
necessary conditions for both sides to continue negotiations,"
China's commerce ministry spokesman, Gao Feng, told reporters.
HOW LOW CAN YOU GO
The comments had come after a choppy Asian session. MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 0.15%, Singapore shares .STI hit
eight-month lows and Japan's Nikkei .N225 ended fractionally
lower.
Bond markets around the world were also still grappling with
recession worries. Yields on 30-year U.S. Treasuries and 10-year
German bunds had both hit record lows - 1.905 percent
US30YT=RR and minus 0.716 percent DE10YT=TWEB respectively.
Inversion also remains a prominent feature across the U.S.
yield curve, where long-dated yields are below short-dated ones
- a reliable indicator ahead of U.S. recessions in the past.
The 10-year Japanese government bond yield JP10YTN=JBTC
had dipped 1 basis point to minus 0.285% overnight too, which is
just above its record low of minus 0.300% touched in 2016.
"Falls in global bond yields reflect growing concerns that
long-term global growth is slowing down on U.S.-China tensions
and worries over subsequent global supply chain disruptions,"
said Tomoo Kinoshita, global market strategist at Invesco Asset
Management in Tokyo.
"Stock markets on the other hand are supported in the
near-term by hopes of more stimulus, notably from the Federal
Reserve and the European Central Bank," he said.
The two major central banks are expected to cut rates next
month, while many investors believe the Bank of Japan could join
the fray if market sentiment weakens further.
ARGENTINA RESTRUCTURING
Precious metal investors were still on a quest to buy safer
assets.
Gold XAU= rose as high as $1,543 per ounce, near six-year
highs of $1,556.1 set earlier in the week, while silver XAU=
rose 1.2% to $18.55 per ounce which is just shy of a 2017 peak
of $18.65 an ounce.
Also reflecting nervousness, the Merrill Lynch move index
.MERMOVE3M , a gauge of investors' expectations on how volatile
U.S. bonds will be, has risen back near three-year highs marked
earlier this month.
The MSCI emerging market currency index .MIEM00000CUS was
also at its lowest levels since mid-November, having fallen 0.9%
so far this week and set for its biggest monthly fall in more
than seven years.
The latest hit came in Argentina as it said it wanted to
restructure a large chunk of its bonds by extending their
maturities and to "re-profile" the maturities of debt owed to
the IMF under a $57 billion standby agreement. The battered peso took another hammering on Wednesday, even
though the central bank intervened heavily in the foreign
exchange market for a second consecutive day.
Argentine assets have been slammed since business-friendly
President Mauricio Macri was trounced in primary elections by
centre-left Peronist challenger Alberto Fernandez.
"President Macri instructed me to solve the short-term
problem to guarantee electoral stability, but also in the
medium- and long-term so as not to leave a problem for the
person who follows, be it he or another candidate," Argentina's
Treasury Minister, Hernan Lacunza, said.
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