* Europe stumbles after stocks climb in Asia
* Safe-harbour bonds and yen make ground
* Rand and lira take the pain in emerging markets
* Big banks kick off Wall Street earnings
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Jan 14 (Reuters) - Global markets experienced a
slight bout of weakness on Tuesday as traders cashed in on
recent record highs, awaited a long-anticipated U.S.-China trade
deal and began to digest the first Wall Street earnings of the
new year.
It was smooth sailing in Asia; MSCI's world stocks index set
a new record high after reassuring Chinese data and Washington
had said it no longer deemed Beijing a currency manipulator. But
Europe's session saw the currents turn.
Dealers struggled to put their finger on the exact cause but
London, Frankfurt and Paris all saw an early wobble which left
the regional STOXX 600 .STOXX down as 0.5%, and bonds and
other safe-haven assets suddenly back in demand. GVD/EUR
"You had some good news in terms of China coming off the
list of currency manipulators and so you would have expected
bond prices to extend losses," said Andy Cossor, a rates
strategist at DZ Bank in Frankfurt.
"So, I think it might be a case that people got ahead of
themselves yesterday and are covering short positions."
Wall Street futures weren't look any brighter either. The
S&P 500, Dow and Nasdaq were all expected to open lower, though
quarterly earnings from U.S. banks JPMorgan JPM.N , Citigroup
C.N and Wells Fargo WFC.N were starting to be digested. .N
A number of heavyweight emerging-market currencies were on
the ropes too. The highly-sensitive South African rand hit a
three-week low and Turkey's lira took its biggest tumble since
mid-December as it dropped 0.4%. EMRG/FRX
China's yuan also backed off, having hit its highest level
since July overnight after the U.S. Treasury Department said it
had removed the currency manipulator tag it had imposed on the
country in August. Beijing had done its part by fixing the yuan's official
level at its firmest level in more than five months. It has also
pledged to buy almost $80 billion more of U.S. manufactured
goods over the next two years and more than $50 billion of
energy supplies, according to a source briefed on the trade
deal. The moves coincided with the arrival of a Chinese delegation
in Washington ahead of Wednesday's scheduled signing of the
Phase 1 trade agreement, seen as calming a dispute that has
upended the world economy. "There have been a number of false starts," said Vishnu
Varathan, head of economics at Mizuho Bank in Singapore, of the
expected deal signing.
"The fact that this is really coming to the moment when the
rubber hits the road is the most tangible evidence of traction
in starting to resolve issues."
In contrast to Europe's dip, Japan's Nikkei .N225 had
added 0.7% overnight to hit its highest level in a month.
Australian shares rose by the same margin to close at a record
.AXJO
Hong Kong's Hang Seng .HSI and Shanghai blue chips
.CSI300 also hit multi-month peaks before running out of
steam.
NEW SEASON
In reaction to the pull-back in risk appetite, gold climbed
up off a two-week low although it was still around 0.2% weaker
for the day at $1,543 per ounce. GOL/
Ten-year U.S. Treasury note yields US10YT=RR , the
benchmark for risk-adverse fixed income markets also rallied,
dropping roughly three ticks to 1.835% compared with the 1.863%
they had touched in Asia.
In currency markets, the Japanese yen stabilised near 110
yen-per-dollar, while another safety play, the Swiss franc, hit
its highest level against a lifeless euro since 2017 and rose
0.4% against the dollar. /FRX
In contrast to China, Washington slapped the currency
manipulator tag on Switzerland on Monday.
Besides the expected trade deal, investors are also looking
to U.S. inflation data due at 1330 GMT, with consensus
expectations for it to hold steady at 0.2% in December.
At the beginning of the fourth-quarter U.S. company results
season, JPMorgan posted what looked to be, at first reading, a
better-than-expected rise in quarterly profit, as strong results
at its trading and underwriting businesses offset weakness in
consumer banking.
Consumer lending is expected to propel profits for big U.S.
banks is the results this week, though stress in corporate
lending and uneven capital markets may cast a shadow.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. Treasury drops China currency manipulator label ahead of
trade deal signing White House plans US-China Phase 1 ceremony, still no final
deal text Dec yuan-denominated exports up 9%, imports up 17.7%
Lighthizer says nearly done with translation of China trade
deal businesses hold back, U.S. consumers seen boosting
big banks' profits $12 trillion stocks market rally https://tmsnrt.rs/2tfURfX
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Additional Reporting by Tom Westbrook in Singapore and Dhara
Ranasinghe in London, Editing by William Maclean and Pravin
Char)