GLOBAL MARKETS-European stocks retreat, sterling skids

* European stocks drop off record highs
* Pound skids 1%as hard Brexit fears re-emerge
* Asia, emerging market shares at highest since June 2018
* World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Marc Jones
LONDON, Dec 17 (Reuters) - European stocks slid from record
highs and sterling dropped amid reports that Britain's prime
minister was ready to play rough in Brexit talks.
U.S.-China trade optimism and reassuring economic data from
China had driven Asia and the main emerging market stocks index
to 18-month highs overnight, but the greens immediately turned
red when London, Frankfurt and Paris opened. .EU
The FTSE 100 .FTSE , which had seen its best day in nearly
a year on Monday, dropped 0.2% and the UK's domestically focused
mid-cap index .FTMC plunged 1.6%, after reports UK PM Boris
Johnson would use his control of parliament to ban any extension
of the Brexit transition beyond 2020. The pound GBP=D3 fell 1% to back below $1.32 and nearly 2%
under Thursday and Friday's post-election highs of over $1.35.
/FRX
The broader European STOXX 600 .STOXX dropped 0.6%, hurt
by a profit warning from consumer goods giant Unilever ULVR.L
that sent its shares down nearly 6%. .EU
"So much for pragmatism," J.P. Morgan's Malcolm Barr said,
referring to reports of Johnson's hard-line Brexit stance. "We
have put the risk of a no-deal end to the transition at 25%, a
number we regard as uncomfortably high."
Britain's political wrangling couldn't keep Asian stocks
from joining a global rally, however, as more U.S. officials
confirmed phase one of a trade deal with China was done,
although the details remain unpublished.
The preliminary deal between Washington and Beijing reached
last week will double U.S. exports to China, White House adviser
Larry Kudlow told Fox News on Monday. The United States will
also reduce some tariffs on Chinese goods under the agreement.
Shanghai, Hong Kong and Seoul all gained more than 1% and
MSCI's all-country index .MIWD00000PUS set a record high,
putting its gains for 2019 at almost 23%, its best year in a
decade and the fourth-best year ever.
The return of Brexit angst meant safety trades were back in
Europe. Most 10-year euro zone bond yields were around two basis
points lower DE10YT=RR , NL10YT=RR , FR10YT=RR GVD/EUR .
Germany's 10-year yield was at -0.30%.
In commodity markets, oil was near three-month highs in
anticipation of growing demand from the world's biggest
economies. O/R Brent crude LCOc1 held steady at $65.32 per
barrel, after climbing on Monday. Gold XAU= rose to $1,477 per
ounce. GOL/
The Australian dollar AUD=D3 was under pressure after
minutes of the central bank's December policy meeting showed it
might cut interest rates again in February if needed.
Wall Street futures pointed to a subdued start in New York
later after a record-high finish on Monday. ESc1
"People are looking to close the year on a good note," said
Vishnu Varathan, head of economics and strategy at Mizuho Bank
in Singapore. "I think that these are far more opportunistic
than they are conviction trades, so they tend to be a little bit
more prone to taking profits."