* Gold hits record high, silver adds to 30% July surge
* Dollar at 22-month low, euro sails up through $1.17
* Asia tech shares gain after Intel's plunge
* U.S.-China tensions keep investors on edge
* Earnings, U.S. stimulus talks in focus
* 2020 global asset performance http://tmsnrt.rs/2yaDPgn
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
*
By Marc Jones
LONDON, July 27 (Reuters) - Gold soared to an all-time high
on worsening ties between the United States and China, a sinking
dollar and ultra-low interest rates on Monday, while stock
markets faltered before a deluge of corporate earnings.
Europe's main stock markets were still hurting after their
first weekly drop in four and as the euro's fastest gains since
early 2016 took past $1.17 /FRX , but it was weakening dollar
and precious metals surge that dominated.
Gold made a 1.6% jump to surpass its 2011 highs and put
$2,000 per ounce XAU= in its sights. Silver climbed another
7.5% XAG= , to take its July streak past 30%, which would be
its best month on record. GOL/
A lot of factors were in play for markets, said Shafali
Sachdev, the head of FX Asia at BNP Paribas Wealth Management in
Singapore, from U.S.-China tensions to a second wave of
coronavirus outbreaks.
"If you look at the fact that the dollar's been higher
yielding than many other currencies for quite a while, and with
some of the benefits of that being eroded ... and also the
continued demand for a safe haven, it all plays into gold's
strengthening," she said.
"And at this point there doesn't seem any obvious factor
that could help the trend to draw to a close."
European stocks cut some early losses after data from
Germany showed an improvement in business morale they continued to struggle. .EU
Travel and leisure stocks .SXTP were down nearly 2.5%,
with airlines and tour operators such as TUI AG TUIGn.DE ,
TUIT.L , Easyjet EZJ.L , British Airways owner IAG ICAG.L
falling between 7.5% and 12% after Britain imposed a 14-day
quarantine on travellers returning from Spain, where coronavirus
cases are rising again.
Asia was also choppy. A 10% rally in Taiwanese chipmaker
TSMC 2330.TW helped the tech sector, after U.S. rival Intel
INTC.O saw its shares plunge more than 16% on Friday.
Elsewhere, mainland Chinese shares gave up most of their
early gains, with the CSI300 index .CSI300 closing up just
0.2%, after steep losses on Friday too. .SS
Japan's Nikkei .N225 fell 0.2%, though S&P 500 futures
ESv1 steadied and were last up 0.5% in Europe. .N
Global shares had lost steam late last week after Washington
ordered China's consulate in Houston to close, prompting Beijing
to close the U.S. consulate in Chengdu.
U.S. Secretary of State Mike Pompeo said Washington and its
allies must use "more creative and assertive ways" to press the
Chinese Communist Party to change its ways. "U.S. President (Donald) Trump used to say China's President
Xi Jinping is a great leader. But now Pompeo's wording is
becoming so aggressive that markets are starting to worry about
further escalation," said Norihiro Fujito, chief investment
strategist at Mitsubishi UFJ Morgan Stanley Securities.
MORE STIMULUS
Key for markets this week will be the U.S. Federal Reserve's
latest meeting, U.S. gross domestic product figures and earnings
releases from the world's main tech companies, including
Facebook on Wednesday and Amazon, Apple and Google on Thursday.
.N
Hopes for a quick U.S. economic recovery are fading as
coronavirus infections showed few signs of slowing.
That means the economy could capitulate without fresh
support from the government, with some of the earlier steps such
as enhanced jobless benefits due to expire this month.
Investors hope U.S. Congress will agree on a deal before its
summer recess. U.S. Treasury Secretary Steve Mnuchin said the
package will contain extended unemployment benefits with 70%
"wage replacement" -- but there are some sticking
points.
Democrats, who control the House of Representatives, want
enhanced unemployment benefits of $600 per week to be extended
and are looking for a much bigger stimulus compared with the
Republicans' $1 trillion plan.
Concerns about the U.S. economic outlook have also started
to weigh on the dollar. The dollar index USD= dropped 0.5% to
its lowest in nearly two years. /FRX
The euro gained 0.5% to a 22-month high of $1.1725 EUR= ,
continuing a winning streak since last week's agreement on a 750
billion-euro post-pandemic EU recovery fund.
Against the yen, the dollar slipped 0.7% to 105.355 yen
JPY= , a four-month low. The British pound hit a
four-and-a-month high of $1.2868 GBP= and benchmark Bunds and
Treasuries gained ground in the bond markets. GVD/EUR /US
Oil prices were capped on worries about the worsening
Sino-U.S. relations and both new and returning waves of the
coronavirus around the world, which have now infected more than
16 million people and killed nearly 650,000. Brent futures LCOv1 were at $43.40 per barrel and U.S.
crude futures CLc1 at $41.44.
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