July 17, 2020 / 12:53 PM / 20 days ago

GLOBAL MARKETS-Where did all the bulls go? Rallies stall as EU summit begins

* European stocks grind to halt as recovery fund summit begins

* Hopes of more U.S. fiscal spending suppress China tensions

* Gold clinging on for sixth weekly gain in a row

* World stocks set for modest 1% weekly gain

* FAANGs pranged by Netflix flop

* World FX rates in 2020 tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, July 17 (Reuters) - Europe’s stock markets and fast charging currencies were left treading water on Friday, as EU leaders met in Brussels to try to hammer through a 750 billion euro post-pandemic recovery fund.

European, U.S. and world equity markets were heading for their third weekly gain in a row, but they were the smallest yet and Friday’s go-slow involved all the main asset classes from commodities to bonds.

London’s FTSE, Germany’s DAX and the euro all managed to tick higher but Milan and Madrid had sagged into the red as their governments’ bond yields struggled to stay anchored to recent lows.

“Presumably, as is the way of Europe, they will agree to come back from more talks followed by a compromise and a watered down deal,” Societe Generale’s Kit Juckes said of the EU discussions. “The positive though is that we are getting a recovery fund.”

An eventual green light to the 750 billion euro plan should finally lead to joint European debt, but investors are seeing their broader list of uncertainties and questions growing again.

Will the COVID-19 pandemic force economies into lockdown again? Will governments and central banks keep feeding the markets beast with stimulus? And finally, are tech shares losing their mojo?

Wall Street futures were pointing fractionally higher as results from asset manager BlackRock helped offset the near 10% skid by Netflix after the bell on Thursday after its subscriber numbers had flopped.

The S&P 500 has exceeded the Nasdaq by nearly 3 percentage points over the past week, its greatest five-day outperformance since late March, possibly as investors take profits from the likes of Amazon and other technology giants that have led Wall Street gains in recent months.

In Asia, Japan’s Nikkei slid 0.3% on concerns about rising virus infections in Tokyo. China’s CSI300 index climbed 0.6%, though that was after a near 5% slump on Thursday.

Adding to the recent rise in U.S.-Sino tensions, Washington had said it was considering banning members of the Chinese Communist Party travelling to the United States. The party totals more than 90 million people.

Market watchers said investors were counting on more stimulus. As well as Europe’s recovery fund, the U.S. Congress is set to begin debating a new aid package next week, as several states in the country’s south and west implement fresh lockdown measures to curb the virus.

While retail sales for June released on Thursday beat market expectations, real-time measures of retail foot traffic and employee working hours and shifts have flatlined after steady growth since April.

“We now see higher risk of a market correction, considering the improvement in hard economic data we have seen over the past couple of months is likely to halt,” said Tomo Kinoshita, global market strategist at Invesco in Tokyo.


In currencies, the euro hovered below the four-week high it touched earlier this week, but was a solid 0.4% higher at $1.1425 and heading for its fourth straight week of gains as European Union leaders met.

Dutch Prime Minister Mark Rutte, one of the main resisters to the recovery fund including mass grants, said that he was “not optimistic” an agreement would be reached on Friday as he arrived for the meeting.

The Netherlands wants countries receiving EU support from the fund to agree to reforms in their labour markets and pension systems, and is leading a group of several smaller EU nations calling for stricter conditions.

The dollar has been struggling globally this week. The yen was also up fractionally at 107.13 per dollar and Sweden’s high-flying crown was on the rise again, having hit a near 1-1/2 year high earlier in the week.

Russia’s rouble was limping to a weekly fall though after allegations from Britain, the United States and Canada on Thursday that Moscow backed hackers had been trying to steal COVID-19 vaccine trial data.

It didn’t help that oil prices were lower in commodities trading too with Brent down 0.5% at $43.16 per barrel and U.S. crude down 0.6% at $40.87.

The United States reported at least 75,000 new COVID-19 cases on Thursday, a daily record. Spain and Australia reported their steepest daily jumps in more than two months, while cases continued to soar in India and Brazil.

The two benchmark crudes had fallen 1% on Thursday too after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to trim their record supply cuts of 9.7 million barrels per day (bpd) by 2 million bpd, starting in August. ($1 = 0.8783 euros)

Reporting by Marc Jones; Editing by Alex Richardson and Raissa Kasolowsky

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