January 24, 2019 / 5:09 PM / 9 months ago

GLOBAL MARKETS-Stocks weak, bonds up after ECB, U.S.-China trade talk

    * S&P 500, Dow edge lower; Nasdaq rises
    * U.S. political uncertainty, global growth worries linger
    * Euro weakens against dollar after ECB commentary
    * Oil steady, U.S. Treasury yields hit one-week low

 (Updates with U.S. markets, adds commentary; changes byline,
dateline, previous LONDON)
    By Sinéad Carew
    NEW YORK, Jan 24 (Reuters) - A global stock index clung to
gains on Thursday and U.S. Treasuries were in demand after the
European Central Bank chief said economic growth was likely to
be weaker than previously expected and the United States was
cautious on prospects for a trade deal with China.
    Demand increased for safe-haven assets with U.S. Treasury
10-year yields hitting a one-week low, on anxiety about slowing
global growth and trade after U.S. Commerce Secretary Wilbur
Ross told CNBC that Washington was "miles and miles" from
resolving trade issues with China.                   
    The dollar rose to its highest against the euro in over five
weeks after ECB President Mario Draghi left the bloc's interest
rates unchanged on Thursday, saying near-term data is likely to
be weaker than previously anticipated due to the fallout from
factors ranging from China's slowdown to Brexit.             
           
    On top of the U.S.-China trade war and its impact on the
global economy investors were also worried about the economic
impact of the longest U.S. government shutdown in history. 
    Thursday's data showed the number of applications for U.S.
unemployment benefits fell to more than a 49-year low last week 
though claims for several states including California were
estimated.             
    While the data was encouraging, Tony Roth, chief investment
officer at Wilmington Trust in Delaware said it was only a
matter of time before a continued shutdown would do "irreparable
damage" to the economy. The shutdown as well as the trade war
with China are adding pressure on U.S. and global economies he
said.
    "Every day that goes by that we don't have positive news on
those fronts, the starting base line (for the market) is
negative," he said. "It's a major tactical blunder that the
(Trump) administration is trying to do both at the same time."
    The Dow Jones Industrial Average        rose 4.73 points, or
0.02 percent, to 24,580.35, the S&P 500        gained 3.69
points, or 0.14 percent, to 2,642.39 and the Nasdaq Composite
        added 38.09 points, or 0.54 percent, to 7,063.86.
    The pan-European STOXX 600 index          rose 0.22 percent
and MSCI's gauge of stocks across the globe                
gained 0.18 percent.
    The euro was 0.5 percent lower against the dollar at
$1.1323. More broadly, the dollar index       , which tracks the
greenback against the euro, yen, sterling and three other
currencies, was up 0.38 percent at 96.488.
    "Draghi's tone definitely shifted to a much more dovish
fashion," said Charles Tomes, associate portfolio manager at
Manulife Asset Management, adding that it "opens the door for a
little bit more downside risk in the euro with economic data
continuing to be more on the weak side."
    U.S. benchmark 10-year Treasury notes             last rose
13/32 in price to yield 2.7085 percent, compared with 2.755
percent late on Wednesday.
    Overnight in Asia, the mood was also cautious. MSCI's
broadest index of Asia-Pacific shares outside Japan
                added 0.3 percent, helped by modest gains in
China. Japan's Nikkei         eased 0.1 percent.
    Oil prices were steady on Thursday, weighed by U.S.
government data that showed an unexpected build in domestic
crude stockpiles, but supported by a U.S. threat of sanctions on
OPEC member Venezuela.
    Brent crude         futures fell 18 cents to $60.96 a barrel
by 11:23 a.m. EST (1623 GMT). U.S. West Texas Intermediate (WTI)
crude        futures rose 24 cents to $52.86 a barrel.      

    
 (Additional reporting by Saqib Iqbal Ahmed and Stephanie Kelly
in New York, Marc Jones and Abhinav Ramnarayan in London;
editing by Andrew Heavens and G Crosse)
  
 
 
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