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GLOBAL MARKETS-China shares lead Asian retreat on Sino-US tensions, euro holds near highs

Credit: REUTERS/ISSEI KATO

Asian shares skidded from six-month peaks on Friday as Sino-U.S. tensions soured what had been an upbeat week, while the euro held near a 21-month top against the embattled dollar and gold neared a record high.

    * Asian stock markets : https://tmsnrt.rs/2zpUAr4
    * Euro near highest since late 2018 as dollar sinks
    * China shares down over 3% on Sino-U.S. tensions  
    * Gold approaching record peak amid COVID uncertainty

    By Wayne Cole
    SYDNEY, July 24 (Reuters) - Asian shares skidded from
six-month peaks on Friday as Sino-U.S. tensions soured what had
been an upbeat week, while the euro held near a 21-month top
against the embattled dollar and gold neared a record high.
    For once, currencies had dominated trading as a deal on a
European Union recovery plan shot the euro to its highest since
late 2018. The single currency was last holding at $1.1602
<EUR=> having climbed 1.5% for the week so far.
    That was taken as a signal to sell the dollar, which was 
down 1.4% on the week against a basket of currencies at 94.645
<.DXY> and heading for its fifth straight weekly loss. 
    It also breached the March low of 94.650 to reach depths not
visited since late 2018. [USD/]
    "The USD bear case continues to sharpen with a break of the
94.65 March lows likely ushering in the next leg down," said
Westpac analyst Richard Franulovich.
    "Europe has reached a major milestone in its fiscal
arrangements, the Recovery Fund amounting to a European Treasury
that will fund EU expenditure via capital market borrowing."
    He noted the dollar faced a major hurdle next week when a
Federal Reserve policy meeting was likely to take a very dovish
lean as the spread of the coronavirus threatened recovery.
    For equity markets, the mood darkened after Beijing ordered
the United States to close its consulate in Chengdu, in
retaliation for being told to shut its consulate in Houston
earlier this week. [nB9N2EM03G]
    Chinese blue chips <.CSI300> retreated 3.7% as a result,
wiping out a week of gains.
    MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> lost 1.7%. Tokyo was closed for a holiday, but
Nikkei futures <NKc1> were trading 350 points below the last 
cash close. 
    E-Mini futures for the S&P 500 <ESc1> edged down 0.3%, while
EUROSTOXX 50 futures <STXEc1> eased 1.1% and FTSE futures
<FFIc1> 1.0%.
    The market's dogged optimism on economic recovery had been 
challenged on Thursday by data showing the number of Americans
filing for unemployment benefits unexpectedly rose last week for
the first time in nearly four months. [nL2N2ET1KN]
    Analysts said there were some technical reasons for the
surprise but noted claims were still more than double their
worst weekly levels seen during the global financial crisis.
    It came as U.S. law makers struggled to agree on a new round
of stimulus measures ahead of the expiry of desperately needed
unemployment benefits. [nL2N2EU0NK]
    All of which was enough to see the Dow <.DJI> end Thursday
down 1.31%, while the S&P 500 <.SPX> shed 1.23% and the Nasdaq
<.IXIC> 2.29%.
    The high-flying tech sector lost some altitude after a tech
watchdog group reported that Apple Inc <AAPL.O> faces consumer
protection investigations in multiple states. [nL3N2EU3RA]
    "In the bigger picture, this news likely represents just a
foretaste of what is likely to come post the November U.S.
elections by way of stepped up antitrust/anti-monopoly
investigations of 'Big Tech', including Google and Facebook, as
well as EU-orchestrated efforts for a new digital tax regime for
global technology behemoths," said Ray Attrill, head of FX
strategy at NAB.
        
    GOLD SHINES
    In bond markets the ocean of liquidity provided by global
central banks is keeping prices buoyed so that yields on 10-year
U.S. paper enjoyed their lowest close since mid-April at 0.5774%
and the whole yield curve flattened. [US/]
    The combination of super-loose money and negative real bond
yields has burnished the attractiveness of gold, which pays no
yield but is supply constrained. [GOL/]
    The precious metal was last at $1,1886 an ounce <XAU=>
having climbed 4.3% so far this week to its highest since
September 2011. That put it within striking distance of the
all-time peak at $1,920.
    Analysts at RBC Capital Markets noted gold-backed exchange
traded product holdings had already reached record peaks.
    "The level of COVID-19 uncertainty, low and negative real
and nominal rates, politics and geopolitics have driven gold
prices sharply higher, and pushed allocations among investors
ever higher," they said in a note.
    Oil prices were ending the week on a flat note, having
failed to hold a five-month high as worries about global demand
offset a weaker U.S. dollar. [O/R]
    Brent crude <LCOc1> futures nudged up 16 cents to $43.47 a
barrel, while U.S. crude <CLc1> gained 9 cents to $41.16.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets    https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations    https://tmsnrt.rs/2Dr2BQA
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Editing by Simon Cameron-Moore and Kim Coghill)
 ((Wayne.Cole@thomsonreuters.com; 612 9321 8162; Reuters
Messaging: wayne.cole.thomsonreuters.com@reuters.net))
 
((To read Reuters Markets and Finance news, click on 
https://www.reuters.com/finance/markets
For the state of play of Asian stock markets please click on: <0#.INDEXA>))

Keywords: GLOBAL MARKETS/ (WRAPUP 4, PIX)

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