* Trump-Xi begin two-day summit on Thursday
* Trade, North Korea top the agenda
* Oil price rebounds, boosts inflation outlook
* Fed minutes, U.S. ADP jobs data awaited
* South African rand resumes weakness
By Vikram Subhedar
LONDON, April 5 Caution prevailed across major
markets on Wednesday before a potentially tense meeting between
U.S. President Donald Trump and his Chinese counterpart Xi
Jinping this week, although metals and oil prices firmed on hope
of better global demand.
The release of minutes from the last U.S. Federal Reserve
meeting, in which it decided to raise interest rates, will be
keenly watched by market participants for any signs of a formal
discussion on reducing the size of the bank's balance sheet.
Overnight, Richmond Federal Reserve President Jeffrey Lacker
abruptly left the U.S. central bank after admitting that a
conversation he had with a Wall Street analyst in 2012 may have
disclosed confidential information about Fed policy options.
The dollar lost its grip on earlier gains as concerns over a
North Korean missile test worsened sentiment ahead of the summit
between the U.S. and Chinese leaders.
The dollar index, which tracks the U.S. currency against a
trade-weighted basket of six peers, was slightly weaker on the
day, as slumping U.S. Treasury yields also gave investors little
incentive to buy dollars.
Topping the agenda at Trump's Mar-a-Lago resort in Florida
will be whether he makes good on his threat to use U.S.-China
trade ties to pressure Beijing to do more to rein in its
nuclear-armed neighbour North Korea, which is working to develop
missiles capable of hitting the United States.
Stock futures on Wall Street were little
"The meetings are expected to be informal, unscripted
discussions of how the two countries will address, but not
immediately resolve, their differences," said strategists at
Morgan Stanley in a note to clients.
"Any commentary on how the U.S. specifically wants to try to
reduce the trade deficit with China will be watched by FX
investors," the strategists wrote.
European stocks were little changed on the day as the
cautious start to the second quarter continued. Oil and
mining-related stocks were outperformers, lured higher by firmer
Easing concerns over France's upcoming presidential election
put the brakes on a fall in euro zone government bond yields.
For a FACTBOX on top broker views on the election see:
Oil climbed to a near one-month high on signs of a gradual
tightening in global oil inventories and on concern about a
supply outage at a field in the United Kingdom's North Sea that
feeds into an international benchmark price.
Brent crude futures, the international benchmark for
oil, were up 1 percent at $54.73 per barrel. U.S. West Texas
Intermediate (WTI) crude futures were also up 1 percent.
London copper rallied as Chinese traders returned
from a two-day break to buy up metals following brighter global
manufacturing reports. Zinc and nickel tracked a rally in steel.
Safe-haven gold, which has benefited from move away from
risky assets this week, faltered at a key technical resistance
level. Spot gold gave up earlier gains to trade down 0.2
percent after failing to cross above its 200-day moving average.
In emerging markets, the South African rand came
under renewed pressure, revisiting the sell-off triggered by
political turmoil and a ratings downgrade.
Inan Demir, senior emerging market economist at Nomura, said
there was room for further weakness in South African assets,
with Zuma's position not as weak as had been perceived.
"He is still in a strong position to stay in place and
implement his policies ... and these policies are likely to lead
to further credit downgrades and further weakness in the rand,"
Shares of top South Africa-exposed asset management firms
listed in the U.K., Investec PLC and Old Mutual
, have lost more than 10 percent over the past week, on
worries over the impact of politics on investor flows.
(Reporting by Vikram Subhedar; Editing by Catherine Evans)