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Risk rally pauses on U.S. data, trade talk caution

Published 2019-11-06, 02:58 p/m
© Reuters.  Risk rally pauses on U.S. data, trade talk caution
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* Dollar, Wall Street slip after U.S. productivity data

* Bond sell-off pauses for further trade talk developments

* Oil prices fall on rising crude stockpiles

By Herbert Lash

NEW YORK, Nov 6 (Reuters) - The dollar slid and the three-day global stock market rally paused on Wednesday as U.S. productivity data disappointed and investors turned a bit cautious about U.S.-China trade talks.

MSCI's All Country World Index .MIWD00000PUS , eased and benchmark U.S. Treasury prices gained following a three-day sell-off. U.S. Government data showed American workers were unexpectedly less productive during the third quarter.

Equity markets have rallied on a reduced recession outlook and optimism a "phase one" U.S.-China trade deal can be reached this month and as global business surveys indicate tariff-hit manufacturing sentiment has troughed.

France's benchmark 10-year bond yield FR10YT-RR turned positive for the first time since July, a further sign that pessimism is abating in world bond markets. GVD/EUR

Investors said lingering concerns about the U.S.-China trade talks had stock markets consolidating gains made recently.

"What you saw over the last two days is a bit of confusion on the China phase one deal ... and that started affecting risk appetite," said Juan Perez, a senior currency trader at Tempus Inc in Washington.

Traders and investors hope a preliminary deal will roll back at least some of the punitive tariffs Washington and Beijing have imposed on each other's goods, but it remained uncertain when or where U.S. President Donald Trump will meet Chinese President Xi Jinping to sign the agreement. stocks edged higher, boosted by gains in financial stocks as investors assessed a mixed bag of earnings reports.

The pan-European STOXX 600 index .STOXX closed up 0.21%. .EU Britain's FTSE 100 .FTSE index rose 0.12%, while Germany's DAX .GDAXI and France's CAC 40 .FCHI added 0.24% and 0.34%, respectively.

On Wall Street, the Dow Jones Industrial Average .DJI fell 5.77 points, or 0.02%, to 27,486.86. The S&P 500 .SPX gained 0.25 points, or 0.01%, to 3,074.87 and the Nasdaq Composite .IXIC dropped 29.89 points, or 0.35%, to 8,404.79.

The U.S. Labor Department said nonfarm productivity, which measures hourly output per worker, fell at a 0.3% annualized rate in the third quarter, the biggest decline in almost four years. in Europe showed signs of economic improvement, suggesting sluggish growth had troughed.

German industrial orders rose more than expected in September, offering some hope for manufacturers in Europe's biggest economy after a tough spell. zone business activity expanded slightly faster than expected last month but remained close to stagnation, according to a survey. currencies, the dollar index .DXY fell 0.04%, with the euro EUR= down 0.06% to $1.1067. The Japanese yen JPY= strengthened 0.21% versus the greenback at 108.93 per dollar.

Oil prices fell, reversing some gains of the previous three sessions, after a surprisingly large build in U.S. crude inventories and weak euro zone economic figures.

Brent crude LCOc1 fell $1.22 to settle at $61.74 a barrel. West Texas Intermediate crude CLc1 settled down 88 cents at $56.35.

Benchmark 10-year U.S. Treasury notes US10YT=RR rose 15/32 in price to push their yield down to 1.8124%.

Gold prices rose, as doubts about a U.S.-China trade breakthrough buoyed demand for the safe-haven metal.

U.S. gold futures GCv1 settled up 0.6% at $1,493.10.

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