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Cautious optimism for US-China trade talks lifts shares

A gauge of global equity markets rose yesterday on hopes the US-China trade dispute will cool at talks this week, while Turkey’s lira fell anew after cuts to the country’s credit ratings and shots were fired outside the US Embassy in Ankara.

Wall Street was mixed but broad-based gains in Europe and Asia lifted the MSCI’s all-country world index, which tracks shares in 47 countries. The gauge has recouped last week’s losses sparked by the lira’s plunge, but not declines of the prior week when the Turkish currency began its fall.

Mid-level US and Chinese officials are expected to meet later this week in Washington to discuss their trade dispute. But it is unclear whether the talks will have any effect on the implementation of US tariffs and retaliation by China.

Six days of public hearings on the proposed US duties of up to 25 per cent started in Washington as part of the US administration’s efforts to pressure Beijing for sweeping changes to its trade and economic policies.

Tencent Holdings Ltd was the biggest contributor to MSCI’s global stock gauge, which rose 0.35 per cent, and it was the top gainer on Hong Kong’s Hang Seng index, closing up 4.1 per cent.

The pan-European FTSEuro-first 300 index rose 0.71 per cent and MSCI’s emerging markets index gained 0.99 per cent. The Dow Jones Industrial Average rose 66.57 points, or 0.26 per cent, to 25,735.89, the S&P 500 gained 1.77 points, or 0.06 per cent, to 2,851.9 and the Nasdaq Composite dropped 20.18 points, or 0.26 per cent, to 7,796.15.

Turkey’s lira fell 3.16 per cent to a session low of 6.2 against the dollar. While the lira late last week clawed back sizable losses after touching all-time lows of just over seven to $1 a week ago, it has now declined about 26 per cent so far in August.

In a week light on economic data, investors are turning their attention to central banks.

The Federal Reserve will release minutes from its August policy meeting tomorrow, which will be scrutinised for new signs of whether four interest rate hikes are likely this year.

The US central bank is widely expected to raise rates a third time this year in September, though doubts remain over another hike in December.

Fed Chairman Jerome Powell is due to speak on Friday at the annual economic symposium in August in Wyoming.

Benchmark US Treasury 10-year notes rose 14/32 in price to push yields down to 2.8244 per cent, a four-week low.

The dollar index fell 0.01 per cent, while the euro up 0.03 per cent to $1.144. The Japanese yen strengthened 0.06 percent versus the greenback at 110.45 per dollar.

US crude rose 24 cents to $66.15 per barrel and global benchmark Brent 47 cents to $72.30.

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