* BASF cites trade tensions as hindrance to profits
* Mexican peso tumbles after finance minister resigns
* GRAPHIC-Asian stock markets: https://tmsnrt.rs/2zpUAr4
* GRAPHIC-World FX rates in 2019: http://tmsnrt.rs/2egbfVh
(Updates to mid-afternoon in U.S. markets)
By April Joyner
NEW YORK, July 9 (Reuters) - A gauge of stock markets around
the world fell on Tuesday as trade tensions weighed on the
outlook for corporate earnings and hopes dwindled over a hefty
U.S. interest rate cut, while Mexico's peso tumbled after the
country's finance minister resigned.
European and U.S. stocks dropped early after German
chemicals giant BASF BASFn.DE warned of a 30% fall in its
adjusted annual profit, citing trade friction and a global
slowdown in growth. In Europe, the broad STOXX 600 .STOXX
ended 0.5% lower. On Wall Street, an analyst downgrade of 3M Co MMM.N
contributed to a drop in industrial shares. However, the
benchmark S&P 500 index .SPX pared losses and the Nasdaq
.IXIC posted gains as the internet-focused FAANG stocks rose.
Even so, MSCI's gauge of stocks across the globe
.MIWD00000PUS shed 0.18%.
The Mexican peso MXN= slid as much as 2.25% against the
dollar after Finance Minister Carlos Urzua resigned, citing deep
differences over economic issues. It was last down 1.1%.
Some encouraging news on trade came as the United States and
China were set to relaunch talks this week after a two-month
hiatus. White House economic adviser Larry Kudlow said talks
with the European Union to move forward on a trade agreement
were also in progress. Though skepticism remains on how much progress the United
States and China have made toward resolving their differences,
the day's developments gave a boost to U.S. Treasury yields and
contributed to the paring of losses in U.S. stocks.
"If we do get a resumption of trade negotations, that
provides a path for investors to see a more optimistic view,"
said Mark Luschini, chief investment strategist at Janney
Montgomery Scott. "But we've seen this movie played over and
over again."
The Dow Jones Industrial Average .DJI fell 58.78 points,
or 0.22%, to 26,747.36, the S&P 500 .SPX lost 0.18 points, or
0.01%, to 2,975.77 and the Nasdaq Composite .IXIC added 35.17
points, or 0.43%, to 8,133.56.
Benchmark 10-year notes US10YT=RR last fell 9/32 in price
to yield 2.0631%, from 2.034% late on Monday. The broad focus across markets, though, remained the
potential reaction to monetary policy at the world's top central
banks as U.S. Federal Reserve Chairman Jerome Powell is set to
give testimony before Congress on Wednesday.
Money market futures 0#FF: are still fully pricing in a 25
basis-point cut at the Fed's July 30-31 meeting, but have almost
priced out a larger 50 bps move that had been seen as a real
possibility just a couple of weeks ago.
"It would be pretty disruptive at this stage for Powell to
rule out a cut in July or dampen expectations of a cut in July,"
said Michael Metcalfe, head of global macro strategy at State
Street Global Markets.
In currency markets, Britain's sterling GBP= dropped to a
six-month low and was last 0.4% lower against the dollar at
$1.2465 amid a worsening economic outlook and rising fears about
a no-deal exit for Britain from the European Union. The dollar index .DXY , which measures the greenback
against a basket of six major currencies, rose 0.13%, while the
euro dipped 0.1% to $1.1203. Oil prices firmed as OPEC supply cuts and Middle East
tensions outweighed the U.S.-China trade dispute that has been
dragging down the global economy and oil demand.
Brent crude futures LCOc1 settled up 5 cents to $64.16.
U.S. West Texas Intermediate crude CLc1 settled up 17 cents to
$57.83. Spot gold XAU= ticked 0.1% higher to $1,396.40 an ounce.
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GRAPHIC-Dot plot, Fed funds futures July 9 https://tmsnrt.rs/2YLmEzm
GRAPHIC-Euro zone government debt falls further into negative
yielding territory https://tmsnrt.rs/2YFiJUF
GRAPHIC-U.S. government debt yield curve https://tmsnrt.rs/2YHFE1M
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