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GLOBAL MARKETS-Oil trims gains, but Middle East risks keep stocks on back foot

Published 09/17/2019, 01:33 PM
Updated 09/17/2019, 01:40 PM
GLOBAL MARKETS-Oil trims gains, but Middle East risks keep stocks on back foot
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Oil futures pull back, but risks to sentiment remain
* Stocks edge lower on risk-off trade
* Some investors waiting for Fed meeting

By Stanley White
TOKYO, Sept 17 (Reuters) - Oil shed some of its massive
gains on Tuesday as the United States flagged the possible
release of crude reserves, but the threat of military action
over the attacks on Saudi oil facilities kept prices elevated
and stocks under pressure.
While equity market losses have not been large, shaky
investor confidence continued to support safe-haven assets. Gold
edged higher and Treasury prices rose on Tuesday.
Investors otherwise broadly remained on the sidelines ahead
of an expected interest rate cut from the U.S. Federal Reserve
on Wednesday and the next round of U.S.-China trade talks on
Thursday.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was down 0.66%. Chinese shares .CSI300 fell
1.07%, while Hong Kong shares .HSI slumped 1.18%.
Euro Stoxx 50 futures STXEc1 were down 0.11%, German DAX
futures FDXc1 were down 0.02%, while FTSE futures FFIc1 fell
0.31%.
"There is certainly a risk-off tone, but I'm surprised the
markets are not reacting more," said Tsutomu Soma, general
manager of fixed income business solutions at SBI Securities in
Tokyo.
"The U.S. and other countries have oil reserves, which helps
sentiment in a case like this. You also have a lot of positions
riding on the Fed meeting."
Brent crude LCOc1 , the international benchmark, fell 0.96%
to $68.39 per barrel on Tuesday. On Monday, it surged 14.6% for
its biggest one-day percentage gain since at least 1988. O/R
U.S. West Texas Intermediate CLc1 futures were down 1.29%
to $62.09 per barrel following a 14.7% surge on Monday, the
biggest one-day gain since December 2008.
Saturday's attack on Saudi oil facilities has halved the
kingdom's oil output, creating the biggest disruption to global
oil supplies in absolute terms since the overthrow of the
Iranian Shah in 1979, International Energy Agency data show.
U.S. President Donald Trump has authorised the release of
emergency crude stockpiles if needed, which could ease some
upward pressure on crude futures. Trump said on Monday it looked like Iran was behind the
attacks but stressed that he did not want to go to war, striking
a slightly less bellicose tone than his initial reaction.
Iran has rejected U.S. charges that it was behind the
attacks. Tension between the two countries was already running
high over Iran's suspected ambitions to assemble nuclear
weapons. The strikes in Saudi Arabia are likely to raise
regional tensions even further.


The People's Bank of China extended 200 billion yuan
($28.27 billion) of loans from its medium-term lending facility
on Tuesday to maintain liquidity but kept the one-year lending
rate unchanged at 3.3%.
Disappointment that the PBOC did not lower the one-year
lending rate weighed on Chinese shares.
Many analysts expect China to lower benchmark rates for new
loans on Friday to keep pace with monetary easing by other
central banks. Hong Kong shares headed for their biggest decline in three
weeks after Moody's lowered its outlook for the city's credit
rating due to protests in the Asian financial hub. The Chinese-ruled territory has been rocked by more than
three months of clashes, with demonstrators angry about what
they see as creeping interference by Beijing in their city's
affairs despite a promise of autonomy.
U.S. stock futures ESc1 fell 0.08%. On Wall Street, the
S&P 500 ended 0.31% lower.
Spot gold XAU= traded a shade higher at $1,499.77 an ounce
following a 0.7% increase on Monday.
The yield on benchmark 10-year Treasury notes US10YT=RR
fell slightly to 1.8362%.
The dollar was little changed at 108.19 yen JPY=EBS .
The Fed is expected to cut interest rates at a policy
meeting ending on Wednesday, which could put pressure on the
Bank of Japan to ease policy at a meeting the following day.
Trump said on Monday that the United States has reached
initial trade agreements with Japan, but traders are also
focused on the U.S.-Sino trade war. Deputy-level talks between the United States and China are
scheduled to start in Washington on Thursday, paving the way for
high-level talks next month aimed at resolving a bitter trade
row that has dragged on for more than a year. = 7.0758 Chinese yuan)

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Global oil prices pull back from Monday's highs but remain
jittery after Saudi attacks https://tmsnrt.rs/303OXwF
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(Editing by Sam Holmes, Simon Cameron-Moore and Himani Sarkar)

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