GLOBAL MARKETS-Stocks take a breather, Brexit weighs down sterling

* Sterling slips as UK PM describes Brexit deal as difficult
* Japan unveils $708 billion in fresh economic stimulus
measures
* Investors stay on sidelines ahead of a vote in the U.S.
Congress
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Marc Jones
LONDON, Dec 8 (Reuters) - World stocks sagged on Tuesday as
investors struggled to keep the thundering rally of recent weeks
going with COVID-19 infections still surging and London and
Brussels stuck in Brexit purgatory.
Asia had nudged down amid renewed U.S.-China tensions and
Europe's main bourses went sideways as the Brexit drama offset
news that a 90-year-old grandmother from Northern Ireland had
become the first person to receive a COVID-19 vaccine outside a
trial. The pan-European STOXX 600 index .STOXX barely budged,
while sterling was wobbling again GBP=D3 having tumbled as
much as 1.6% on Monday due to the Brexit nerves. FRX/ GBP/
A face-to-face meeting in Brussels between British Prime
Minister Boris Johnston and European Commission President Ursula
von der Leyen in the coming days is now seen as possibly the
only way to salvage a trade deal. "We're always hopeful (of striking a deal) but you know
there may come a moment when we have to acknowledge that it's
time to draw stumps and that's just the way it is," Johnson said
on Tuesday referring to a cricketing term for the end of play.
MSCI's broadest index of Asia-Pacific shares
..MIAP00000PUS narrowed its losses from early trade as Japan
announced a new $700 billion stimulus package, but was still
down 0.1% as anxiety over the coronavirus pandemic also capped
sentiment.
Among Asia's top markets, Australian shares closed higher
for a sixth straight session, lifted by data showing an
improvement in business sentiment. The S&P/ASX 200 index .AXJO
rose 0.2% to 6,687.7, adding about 3% in the past six sessions.
However, Japan's Nikkei 225 .N225 dipped 0.3% and Seoul's
Kospi .KS11 gave back 1.6% of the searing 20% rally it has
seen since the start of November. Chinese blue-chips .CSI300 remained flat and Hong Kong's
Hang Seng .HSI dropped 0.6%, as Sino-U.S. tensions continued
to weigh on the market.
Chinese Foreign Minister Wang Yi assured U.S. executives
that Beijing remained committed to the Phase 1 trade deal with
the United States. That came as a report showed China's
purchases of U.S. goods and services as of October, specified in
the Phase 1 deal at $75.5 billion for 2020, was about half the
level they should be on a pro-rated annual basis. The United States also imposed financial sanctions and a
travel ban on 14 Chinese officials over their alleged role in
Beijing's disqualification last month of elected opposition
legislators in Hong Kong.
Chinese foreign ministry spokeswoman Hua Chunying hit back,
saying Beijing would take "firm counter-measures against the
malicious actions by the U.S. to safeguard our sovereignty,
security and developmental rights". On Wall Street, the Nasdaq Composite .IXIC rose 0.45%
while the Dow Jones Industrial Average .DJI dropped 0.5% and
the S&P 500 .SPX lost 0.2%. Some investors are watching whether U.S. policymakers can
reinvigorate efforts to pass additional pandemic stimulus. The
U.S. Congress is expected to vote this week on a one-week
stopgap funding bill to give negotiators more time to strike a
compromise, as the business community cautioned inaction could
spur a deeper recession. At the same time, California, the nation's most populous
state, announced new restrictions on travel and business
activity after record case numbers and hospitalizations.
Officials in New York warned similar restrictions could be
employed soon, which further weigh on the nation's recovery.
The dollar steadied against most currencies as investors
eyed potential stimulus and vaccine development. An index that
tracks the dollar against a basket of currencies was little
changed at 90.829 =USD , not far from 90.471, its weakest since
April 2018.
The Brexit-bound pound GBP= was down 0.3% in London at
$1.3338 although that was well above Monday's low of $1.3225.
GBP/
In the bond markets, Euro zone government bond yields edged
lower ahead of an expected new round of European Central Bank
stimulus later this week, and as uncertainty remained over both
Brexit and a European Union recovery fund. GVD/EUR
A two-day EU summit begins Thursday, and the bloc is ready
to set up its planned EU stimulus without Hungary and Poland,
which are maintaining their veto of the EU budget.
British borrowing costs were down, after falling 7 basis
points to 0.28% on Brexit worries on Monday. The benchmark
10-year Gilt yield GB10YT= dropped 1 basis point as did those
on German Bunds which are at -0.592%.
Oil prices fell, extending losses from the previous session.
Brent crude .LCOc1 fell 0.3% and U.S. crude .CLc1 dipped
0.5%.
Prices had come under pressure after Reuters had reported
the U.S. was prepping sanctions on Chinese officials over Hong
Kong. Spot gold prices XAU= were 0.22% higher at $1,867.70 per
ounce, and U.S. gold futures GCv1 settled up 0.31% at
$1,871.7, as investors bet on more stimulus money being pumped
into the financial system.
"The (global) economic system still needs significant policy
support for the reasons we know," said Joseph Little, Chief
Global Strategist at HSBC GAM.
But "my sense at the moment is that we are in a phase of
healing".

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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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