GLOBAL MARKETS-Stocks cheered by trade deal hopes but caution prevails

* MSCI Asia ex-Japan +0.57%; Nikkei +0.7%
* European futures point higher in early deals
* Kudlow says U.S., China getting close to trade deal
* Yen weakens, U.S. Treasury yields higher

By Andrew Galbraith
SHANGHAI, Nov 15 (Reuters) - Asian stocks jumped on Friday,
lifted by White House comments that suggested the possibility of
an imminent trade deal between Washington and Beijing, which
revived hopes that their tariff war may be nearing an end.
However, investor sentiment remains fragile after weak data
from China reinforced concerns about the global economy and amid
increasing caution about false signs of progress in Sino-U.S.
trade talks.
The buoyant mood looked set to extend to Europe, where
pan-region Euro Stoxx 50 futures STXEc1 rose 0.57% to 3,705,
German DAX futures FDXc1 climbed 0.53% to 13,253.5, and FTSE
futures FFIc1 inched up 0.36% to 7,322.
U.S. S&P 500 e-mini stock futures ESc1 also rose, adding
0.35% to 3,107.8 after the S&P 500 index .SPX finished at a
record closing high on Thursday.
Providing a fillip to investor confidence in early Asian
trade, White House economic adviser Larry Kudlow said Washington
was getting close to a trade agreement with China. That helped to lift MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS up 0.57%. Japan's Nikkei
.N225 added 0.7% and Australian shares .AXJO gained 0.87%.
Chinese blue-chip shares .CSI300 , in contrast, struggled
to hold gains after rising as much as 0.23% earlier in the day.
The CSI300 index was last down 0.45%.
In Hong Kong, where anti-government protesters paralysed
parts of the financial hub for a fifth day on Friday, the Hang
Seng index gained 0.15%, but was on track for its worst weekly
performance in nearly four months. Shane Oliver, chief economist at AMP Capital in Sydney,
likened regional markets' bullish reaction to positive trade
news to being in a relationship with an alcoholic, driven by
entrenched hopes for recovery.
"Markets want to believe that there will be some sort of
resolution to this issue, some sort of lasting truce at least,
even though the experience of the last 18 months doesn't give a
lot of cause for comfort," he said.
However, Oliver said weaker Chinese and U.S. economies, and
the U.S. presidential election next year put pressure on both
sides to come to an agreement.
The safe-haven yen JPY= weakened, with the dollar rising
0.17% to buy 108.57 yen. The euro EUR= was barely changed at
$1.1023 and the dollar index, which tracks the greenback against
a basket of six major rivals .DXY was off just 0.02% at
98.143.
Higher U.S. Treasury yields also illustrated the risk-on
tone in the Asian session, with the 10-year yield US10YT=RR
rising to 1.848% from a US close of 1.815% on Thursday.
The policy-sensitive two-year yield rose to 1.6101% from
1.593% on Thursday after U.S. Federal Reserve Chair Jerome
Powell said the risk of the U.S. economy facing a dramatic bust
is remote. A Reuters poll of more than 100 economists showed that while
concerns have eased over a U.S. recession, few see an economic
rebound, and most believe a trade truce is unlikely in the
coming year. Global sentiment has been buffeted in recent weeks by
conflicting assessments of progress in talks between the United
States and China aimed at ending their 16-month-long trade war.
On Thursday, China's commerce ministry said that the two
countries are holding "in-depth" discussions on a first phase
trade agreement, and that cancelling tariffs is an important
condition to reaching a deal. China has also ended a nearly five-year ban on imports of
U.S. poultry meat, which the U.S. Trade Representative said
would lead to more than $1 billion in annual shipments to China.
Those developments followed comments from officials from
both countries last week that they had a deal to roll back
tariffs, only to have U.S. President Donald Trump deny that any
such deal had been agreed to. The new record for the S&P, which gained just 0.08% to
3,096.63, came despite a grim outlook from network gear maker
Cisco Systems CSCO.O that underlined the impact of trade
uncertainty.
The company forecast second-quarter revenue and profit below
expectations as increasingly global economic uncertainties kept
clients away from spending more on its routers and switches,
sending its shares down 7.3%. In contrast to the S&P 500, the Dow Jones Industrial Average
.DJI fell 0.01% 27,781.96 and the Nasdaq Composite .IXIC
dropped 0.04% to 8,479.02.
Capping broader confidence was German data that showed the
economy grew just 0.1% in the third quarter, with consumer
spending helping the country to avoid a mild contraction.
That followed numbers from China indicating a
faster-than-expected slowdown in factory output growth in
October due to weak domestic and global demand. In commodity markets, U.S. crude prices rebounded after
sliding Thursday on rising U.S. crude inventories. U.S. West
Texas Intermediate crude CLc1 was 0.44% higher at $57.02 a
barrel.
Global benchmark Brent crude LCOc1 added 0.37% to $62.51
per barrel.
Gold retreated from gains that had been prompted by trade
uncertainty. Spot gold XAU= was last trading at $1,463.90 per
ounce, down 0.48%. GOL/

($1 = 6.9941 Chinese yuan)

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