GLOBAL MARKETS-Stocks climb, French yields steady as vote looms


* Euro near three-week high, French yields hit three-month
    * Steelmakers steady, unfazed by U.S. probe on Chinese
    * Wall Street set to open marginally higher
    * Oil set for worst week in six on U.S. oversupply fears
    * Graphic: World FX rates in 2017
    * French election graphic:
    * Decision Europe Eikon page: cpurl://apps.cp./cms/?navid=72745

    By Jemima KellyLONDON, April 21 (Reuters) - Global markets appeared largely
calm on Friday, the last day of trading before the first round
of France's presidential election, with French bond yields
hitting a three-month low and the euro treading water against
the dollar.
    European stocks edged up, with the pan-European STOXX 600
<.STOXX> index up quarter of a percent on the day by 1230 GMT.
    U.S. stock index futures indicated Wall Street would also
open a little higher, though investors stayed away from making
big bets in either direction ahead of Sunday's vote. <ESc1>
    The euro edged down 0.2 percent to $1.0699 <EUR=>, less than
a cent away from a three-week high hit earlier in the week.
    Investors seemed relatively confident that while the
far-right Marine Le Pen might well win enough votes on Sunday to
make the second round on May 7, she will then be comfortably
beaten, probably by centrist candidate Emmanuel Macron.
    "On the assumption that the French election will provide a
market-friendly winner, we believe that euro zone assets may be
poised to rally strongly in the next few weeks as political risk
declines," said Mark Dowding, partner at BlueBay Asset
Management in London.
    "But the sheer unpredictability of a four-horse race creates
a real sense of uncertainty. As a result we believe that it may
be appropriate to wait until the start of next week before
adding to positions," he added.
    France's CAC <.FCHI> stock index edged down 0.1 percent,
just over 1 percent off its highest levels since mid-2015.
    A fatal attack on police officers in Paris overnight caused
investors some immediate jitters, with the gap between French
and German 10-year borrowing costs -- a key indicator of
election nerves in recent months -- rising sharply in the first
few minutes of trading in Europe.
    Dealers said this was on concern the attack could sway the
vote in favour of anti-immigrant Le Pen, whose anti-European
Union stance is of concern to many in the markets. [nL8N1HS6BF]
    But that move reversed as the session wore on, with the
yield on 10-year French government debt hitting its weakest
since mid-January and the gap between it and its German
equivalent falling to its tightest in three weeks, before French
yields rose a little again to trade flat on the day.
    Although falling yields usually indicate investors seeking
safety, in the case of the election uncertainty lower French
yields imply a more steady-as-she-goes approach to the future.
    Options markets <EURVOL=> suggested investors remain worried
about strong results for Le Pen and/or hard-left challenger
anti-EU Jean-Luc Melenchon that would point to the risk of
another major political shock for Europe in two weeks time.
    "It is kind of reminiscent of the big events last year where
people know that it is a binary outcome so the best approach is
to remain as cautious as possible," said Simon Derrick, head of
the global markets research team at Bank of New York Mellon in

    Asian stocks ended the week on a positive note, unscathed by
a U.S. trade probe on Chinese steel exports. MSCI's broadest
index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> added
0.5 percent, but was down 0.4 percent on the week.
    Asian steelmakers were mostly steady or higher, as investors
dismissed for now any negative impact from the launch of a U.S.
trade probe against Chinese steel exporters, although Chinese
companies shed some of their earlier gains. The move sent their
U.S. counterparts surging over 8 percent overnight. [nL1N1HS1FC]
    "The U.S. accounts for a small proportion of China's steel
exports," said Yang Kunhe, steel analyst at Northeast Securities
in Beijing, adding Northeast Asia and Africa have been growing
markets for Chinese steel over the past few years.
    "But if Trump's probe translates into actions, it would
increase the chance of trade friction, and hurt market
    Markets also mostly shrugged off White House comments that
the U.S. may consider tit-for-tat tariffs on imports, and
concerns raised by the International Monetary Fund that U.S. tax
cuts could fuel financial risk-taking and increase public debt.
    Japan's Nikkei <.N225> advanced 1 percent, posting a weekly
gain of 1.6 percent.
    The safe-haven yen, which tends to move inversely to the
Nikkei, was on track for its worst week against the dollar in
seven <JPY=>, down around half a percent as nerves over
geopolitical tensions have eased off a touch.
    In commodity markets, oil held near $53 a barrel on Friday,
but was on course for its biggest weekly drop in a month due to
doubts that an OPEC-led production cut will restore balance to
an oversupplied market. [O/R]
    Gold <XAU=> was flat at $1,282.62 an ounce.

    For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=

Graphic: World FX rates in 2017
French election graphic:
Decision Europe Eikon page:    cpurl://apps.cp./cms/?navid=72745
 (Additional reporting by Kit Rees, Abhinav Ramnarayan, Marc
Jones and Patrick Graham in London, and Nichola Saminather, John
Ruwitch, Samuel Shen and Sadiq Iqbal Ahmed in Singapore)
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