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GLOBAL MARKETS-World stocks sink as tariff deadline approaches

Published 10/12/2019, 11:29 pm
Updated 10/12/2019, 11:35 pm
© Reuters.  GLOBAL MARKETS-World stocks sink as tariff deadline approaches
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* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Markets wary of Dec. 15 tariff deadline

* European stocks down for second day

* German ZEW sentiment higher than expected

* Fed, ECB meetings eyed

By Ritvik Carvalho

LONDON, Dec 10 (Reuters) - Global stock markets fell for a second day on Tuesday, as caution over a Dec. 15 deadline for the next round of U.S. tariffs on Chinese imports weakened risk appetite and limited outsized market moves.

Following their counterparts in Asia, European shares fell for a second day, with the pan-European STOXX 600 index .STOXX down 1.09% at 1206 GMT. Germany's DAX .GDAXI fell 1.44% to its lowest in a week. .EU

The MSCI All-Country World Index .MIWD00000PUS , which tracks shares across 47 countries, was down 0.2%. U.S. stocks futures were down about 0.3%. NQc1 ESc1 .N

Market uncertainty before the tariff deadline was reinforced by comments from U.S. Agriculture Secretary Sonny Perdue on Monday, who said President Donald Trump did not want to implement tariffs but did want to see "movement" from China. deadline looms over a series of events this week, with markets also awaiting the UK election on Thursday and U.S. and European Central Bank meetings.

Euro zone government bond yields were mostly steady, refusing to budge from recent ranges. Germany's benchmark Bund yield inched up to -0.29% DE10YT=RR , moving in a three-basis- point-range.

Italian 10-year bond yields, which fell on Monday, were flat on the day at 1.39% IT10YT=RR . GVD/EUR

In the euro zone, Christine Lagarde holds her first meeting and news conference as ECB chief on Thursday. for policy action from the ECB and Fed are subdued," said Commerzbank (DE:CBKG) rates strategist Rainer Guntermann. "Lagarde's communication style will be watched closely, but that's unlikely to lead to any repricing in bond markets."

Germany's ZEW research institute said its monthly index on economic morale among investors rose to 10.7 from -2.1 a month earlier, much higher than forecast by economists. reading pushed up a market gauge of euro zone inflation expectations EUIL5YF5Y=R to its highest in a month and boosted the euro, which last traded 0.15% higher at $1.1082. EUR=

On Tuesday, the U.S. two-year yield, a sign of market expectations of Fed fund rates, was at 1.619%, down from its close of 1.627% on Monday. The 10-year Treasury yield US10YT=RR was at 1.8138% from a U.S. close of 1.8225% on Monday.

With investors reluctant to make big bets, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was 0.25% lower. China's benchmark Shanghai Composite index .SSEC was higher by 0.1%.

New data in China showed producer prices fell in November but consumer prices spiked, complicating efforts to boost demand as economic growth slows. shares .AXJO were down 0.34%. Japan's Nikkei .N225 fell 0.08%.

Tepid trade followed weakness on Wall Street overnight. The Dow Jones Industrial Average .DJI fell 0.38% to 27,909.6, the S&P 500 .SPX lost 0.32% to 3,135.96 and the Nasdaq Composite .IXIC dropped 0.4% to 8,621.83. were also keeping an eye on the U.S. Federal Reserve. The Fed is expected to leave rates unchanged at its two-day policy meeting, which ends Wednesday. Analysts say investors will be watching policymakers' forecasts for future U.S. economic growth. have focused this year on the risks of the UK crashing out of the European Union without a deal and a sharp escalation in trade war tensions, said Frank Benzimra, head of equity strategy at Societe Generale (PA:SOGN).

"What you have seen since the end of the third quarter and the beginning of the fourth quarter was these two risks were receding ... And now this week you see those two concerns coming back on the market," he said, adding that he expected their effect would be short-term.

Sterling, which reached its highest against the dollar since April on Monday at $1.3180, added 0.3%, last changing hands at $1.3169. GBP= GBP/

Expectations of a Conservative Party victory in Thursday's UK election have powered a rally in the pound, but options markets indicate worries of a post-election retreat. dollar index .DXY , which tracks the U.S. currency against a basket of six other major currencies, was down 0.14% at 97.506.

Worries over trade continued to push oil prices lower. Data released on Sunday showed that Chinese exports declined for a fourth straight month, underscoring the impact of the trade war between the U.S. and China, which is in its 17th month. benchmark Brent crude LCOc1 fell 0.54% to $63.90 a barrel and U.S. West Texas Intermediate crude CLc1 dipped 0.54% to $58.7 a barrel. O/R

Gold rose XAU= 0.4% to $1,467.31 per ounce. GOL/

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