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GLOBAL MARKETS-Shares hit by tech problems and Brexit snags

Published 23/10/2019, 08:18 pm
© Reuters.  GLOBAL MARKETS-Shares hit by tech problems and Brexit snags

* Brexit developments sap rally in global shares, pound yanked off %1.30

* Texas Instruments revenue forecast hits chipmakers

* China says report of HK's Carrie Lam being replaced has "ulterior motives"

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, Oct 23 (Reuters) - World stock markets fell on Wednesday, as hopes faded that a Brexit deal would be wrapped by next week and a profit warning from Texas Instruments pulled down tech shares.

It was hard to pick which was weighing on sentiment more in early European trading. The pound was yanked down to $1.2850 from $1.30 GBP= after UK lawmakers put the brakes on the government's Brexit plans again on Tuesday. Europe's tech sector .SX8P fell 1.4%. STMicroelectronics STM.MI , Dialog Semiconductor DLGS.DE and Infineon IFXGn.DE all dropped after Texas Instruments slumped 10% TXN.O in after-hours Wall Street trading. Asian chipmakers, including Taiwan's TSMC 2330.TW and South Korea's SK Hynix 000660.KS , had fallen on worries the industry was being squeezed both by a downturn in global demand and by the U.S.-China trade war.

"When there are tensions in trade and obstacles to trade, what do businesses do? They become more cautious. And they pull back," Rafael Lizardi, Texas Instruments' chief financial officer, said after the company's results.

With investors seeking out safer assets again, the Japanese yen climbed to a one-week high of 108.25 per dollar JPY= and the Swiss franc CHF= gained early in Europe. FRX/

Adam Cole, a strategist at RBC Capital Markets, said Brexit was driving a "general risk-off tone". Others pointed to the growing likelihood UK Prime Minister Boris Johnson would now push for a snap election. could change very quickly today, depending on the EU response," Cole said, referring to how long EU leaders would extend the Oct. 31 Brexit deadline. But he added he didn't see "much downside" risk for sterling now, with a no-deal Brexit off the table.

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The pound has surged 4.5% this month which, if it holds the gains, will be its best month since January last year.

Receding worries about a no-deal Brexit also underpinned the euro at $1.1122 EUR= , just below a two-month high of $1.1180.

The dollar was subdued before a Federal Reserve policy meeting next week, where policymakers are expected to cut interest rates by 0.25 percentage point.

In commodity markets, oil prices fell after data showed U.S. crude inventories grew more than expected last week. But prices generally held firm after China signalled hopes for progress in upcoming trade talks with the United States and OPEC and its allies considered deeper cuts in production.

Brent crude LCOc1 futures fell 0.52% to $59.39 a barrel. U.S. West Texas Intermediate crude CLc1 lost 0.81% to $54.04 per barrel.

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