GLOBAL MARKETS-Stocks slip on Trump's warning to China; sterling's slump carries on

* Sterling hits 28-month low on no-deal Brexit angst
* Oil futures rise more than 2%, up for 4th session

(Updates with U.S. market close)
By Rodrigo Campos
NEW YORK, July 30 (Reuters) - A gauge of global stock
markets fell on Tuesday as the latest round of U.S.-China trade
talks began with a threat from President Donald Trump, while
concerns over a no-deal Brexit continued to drag the British
currency lower.
Trump warned China against waiting out his presidency before
finalizing a trade deal, saying if he wins re-election in
November 2020, the outcome could be no agreement or a harsher
one. Traders are also bracing for the Federal Reserve's policy
announcement on Wednesday, for which markets have already fully
priced in a quarter of a percentage point rate cut. A 50
basis-point cut has a 1-in-5 chance, according to futures
markets.
"If not for trade policy, we would not be using monetary
policy in the way we are using it now," said Art Hogan, chief
market strategist at National Securities in New York.
"The real conundrum is if, in fact, the Fed cuts rates
because they are seeing a global economic slowdown and no real
inflation, then the administration becomes emboldened to fight
this battle longer."
Major Wall Street stock averages ended slightly lower. The
Dow Jones Industrial Average .DJI fell 23.33 points, or 0.09%,
to 27,198.02, the S&P 500 .SPX lost 7.79 points, or 0.26%, to
3,013.18 and the Nasdaq Composite .IXIC dropped 19.72 points,
or 0.24%, to 8,273.61.
The pan-European STOXX 600 index .STOXX lost 1.47% and
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.39%. Emerging market stocks lost 0.25 percent. MSCI's broadest
index of Asia-Pacific shares outside Japan .MIAPJ0000PUS
closed 0.09 percent lower, while Nikkei futures NKc1 fell 0.7
percent. In currencies, sterling continued to stumble against the
dollar after suffering its biggest decline in eight months on
Monday. Prime Minister Boris Johnson promised on Tuesday to lead
Britain out of the European Union on Oct. 31 "no matter what."
Many investors say a no-deal divorce from the EU would tip
Britain into a recession and inject unwanted uncertainty into
financial markets.
The pound GBP= fell to as much as $1.2121, its lowest
since March 2017 and was last trading at $1.215, down 0.55% on
the day. "Sterling is moving due to local political developments -
most importantly the idea that Prime Minister Johnson may not
want to meet European leaders unless they change their position,
which is a more hard-line stance than the market would have
expected as recently as a week ago," said Shahab Jalinoos,
global head of foreign exchange strategy at Credit Suisse in New
York.
The dollar index .DXY tracking the greenback against six
major currencies rose 0.03%, with the euro EUR= up 0.09% to
$1.1154. Treasury yields rose ahead of the Fed announcement
after data showed consumer confidence rebounded in July to its
strongest level since November.
Benchmark 10-year Treasury notes US10YT=RR last fell 2/32
in price to yield 2.0597%, from 2.055% late on Monday.
In commodities trading, crude oil prices climbed as the Fed
rate cut anticipation boosted demand expectations, but further
price action hinges on the Fed's language.
"If the language we get from the Fed in post-meeting
comments is on the conservative, rather than accommodative side,
the U.S. dollar is likely to continue to remain strong and
continue to present a headwind for an advance in oil," Harry
Tchilinguirian, global oil strategist at BNP Paribas in London,
told the Reuters Global Oil Forum.
Prices rose further after API data showed a
larger-than-expected draw in U.S. crude stockpiles. U.S. crude CLc1 rose 2.57% to $58.33 per barrel and Brent
LCOc1 was last at $64.97, up 1.98% on the day.
Spot gold XAU= added 0.3 percent to $1,430.39 an ounce.
Copper CMCU3 lost 1.33 percent to $5,938.00 a tonne.

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GRAPHIC-Sterling vs other world currencies in 2019 https://tmsnrt.rs/2ypmwtS
GRAPHIC-Global assets in 2019 http://tmsnrt.rs/2jvdmXl
GRAPHIC-Global currencies vs dollar http://tmsnrt.rs/2egbfVh
GRAPHIC-MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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