Huawei CFO to appear in Canada court as Chinese media slam arrest

VANCOUVER/TORONTO (Reuters) – A top executive of China’s Huawei Technologies Co Ltd who is under arrest in Canada is set to appear in a Vancouver court on Friday for a bail hearing as she awaits possible extradition to the United States.

Huawei CFO Meng Wanzhou, 46, who is also the daughter of the company founder, was arrested on Dec. 1 at the request of the United States. The arrest, revealed by Canadian authorities late on Wednesday, was part of a U.S. investigation into an alleged scheme to use the global banking system to evade U.S. sanctions against Iran, people familiar with the probe told Reuters.

The news roiled global stock markets on fears the move could escalate a trade war between the United States and China after a truce was agreed on Saturday between President Donald Trump and Xi Jinping in Argentina.

Trump did not know about the arrest in advance, two U.S. officials said on Thursday, in an apparent attempt to stop the incident from impeding talks to resolve the trade dispute.

Details of the case against Meng, to be heard in the Supreme Court of British Columbia, remain sparse.

Canada’s Justice Department has declined to provide details of the case and Meng has secured a publication ban, which curbs the media’s ability to report on the evidence or documents presented in court.

Chinese Foreign ministry spokesman Geng Shuang said on Friday that neither Canada nor the United States had provided China any evidence that Meng had broken any law in those two countries, and reiterated Beijing’s demand that she be released.

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The bail hearing could be just a preliminary session to set out a schedule, lawyers said.

The Crown counsel is expected to argue that Meng poses a flight risk and should be kept in a detention facility, legal experts said. The onus will be on Meng’s lawyer to provide evidence that she will not flee, they added.

Huawei, which has confirmed Meng was arrested, said on Wednesday that “the company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng.”

A Huawei spokesman declined to comment on Thursday and said that Wednesday’s statement still stands.

Huawei staff briefed on an internal memo told Reuters on Friday the company had appointed Chairman Liang Hua as acting CFO following Meng’s arrest.

Chinese state media have slammed Meng’s detention, accusing the United States of trying to “stifle” Huawei and curb its global expansion.

LONG FIGHT

If granted bail, Meng will likely have to post bail with “a surety of several million dollars”, Vancouver lawyer Gary Botting, who has experience with extradition cases, said. She would also have to give up her passport, he said.

Meng could also be fitted with electronic monitoring equipment, and the court could go so far as to order security to monitor her while she awaits a decision on extradition, lawyers said.

If Meng fights extradition, her case could go on for years, lawyers said, pointing to examples like Lai Changxing, a Chinese businessman who fled to Canada after he was implicated in a bribery case and fought extradition to China for 12 years. If she chooses not to fight, she could be in the United States within weeks, experts said.

“You need massive material and evidence to support detention release,” said Richard Kurland, a Vancouver-based immigration lawyer. He said Meng would likely be returned to detention if there was no decision on bail.

It is unclear where Meng is being held in Vancouver. Several lawyers have noted that detention facilities in the region are spartan and she would likely be sharing her quarters with other inmates.

Huawei, which employs about 1,000 people in Canada, faces intense scrutiny from many Western nations over its ties to the Chinese government, driven by concerns it could be used by Beijing for spying.

Japan could be the latest country to shun Huawei, with sources telling Reuters on Friday it plans to ban government purchases of equipment from Huawei and smaller Chinese peer ZTE Corp.

The news came as the Financial Times reported that Huawei had agreed to demands by UK security officials to address risks found in its equipment and software in a bid to avoid being shut out from future 5G telecoms networks.

The United States has also been looking since at least 2016 into whether Huawei violated U.S. sanctions against Iran, Reuters reported in April.

More recently, the probe has included the company’s use of HSBC Holdings Plc to make illegal transactions involving Iran, people familiar with the investigation said. HSBC is not under investigation, according to a person familiar with the matter.

Huawei, which generated $93 billion in revenue last year and is seen as a national champion in China, has said it complies with all applicable export control and sanctions laws and other regulations.

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Huawei CFO to appear in Canada court in U.S. extradition case

VANCOUVER/TORONTO (Reuters) – A top executive of China’s Huawei Technologies Co Ltd who is under arrest in Canada is set to appear in a Vancouver court on Friday for a bail hearing as she awaits possible extradition to the United States.

Huawei CFO Meng Wanzhou, 46, who is also the daughter of the company founder, was arrested on Dec. 1 at the request of the United States. The arrest, revealed by Canadian authorities late on Wednesday, was part of a U.S. investigation into an alleged scheme to use the global banking system to evade U.S. sanctions against Iran, people familiar with the probe told Reuters.

The news roiled global stock markets on fears the move could escalate a trade war between the United States and China after a truce was agreed on Saturday between President Donald Trump and Xi Jinping in Argentina.

Trump did not know about the arrest in advance, two U.S. officials said on Thursday, in an apparent attempt to stop the incident from impeding talks to resolve the trade dispute.

Details of the case against Meng, to be heard in the Supreme Court of British Columbia, remain sparse.

Canada’s Justice Department has declined to provide details of the case and Meng has secured a publication ban, which curbs the media’s ability to report on the evidence or documents presented in court.

The bail hearing could be just a preliminary session to set out a schedule, lawyers said.

The Crown counsel is expected to argue that Meng poses a flight risk and should be kept in a detention facility, legal experts said. The onus will be on Meng’s lawyer to provide evidence that she will not flee, they added.

Huawei, which has confirmed Meng was arrested, said on Wednesday that “the company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng.”

A Huawei spokesman declined to comment on Thursday and said that Wednesday’s statement still stands.

LONG FIGHT

If granted bail, Meng will likely have to post bail with “a surety of several million dollars”, Vancouver lawyer Gary Botting, who has experience with extradition cases, said. She would also have to give up her passport, he said.

Meng could also be fitted with electronic monitoring equipment, and the court could go so far as to order security to monitor her while she awaits a decision on extradition, lawyers said.

If Meng fights extradition, her case could go on for years, lawyers said, pointing to examples like Lai Changxing, a Chinese businessman who fled to Canada after he was implicated in a bribery case and fought extradition to China for 12 years. If she chooses not to fight, she could be in the United States within weeks, experts said.

“You need massive material and evidence to support detention release,” said Richard Kurland, a Vancouver-based immigration lawyer. He said Meng would likely be returned to detention if there was no decision on bail.

It is unclear where Meng is being held in Vancouver. Several lawyers have noted that detention facilities in the region are spartan and she would likely be sharing her quarters with other inmates.

Huawei, which employs about 1,000 people in Canada, faces intense scrutiny from many Western nations over its ties to the Chinese government, driven by concerns it could be used by Beijing for spying.

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The United States has also been looking since at least 2016 into whether Huawei violated U.S. sanctions against Iran, Reuters reported in April.

More recently, the probe has included the company’s use of HSBC Holdings Plc to make illegal transactions involving Iran, people familiar with the investigation said. HSBC is not under investigation, according to a person familiar with the matter.

Huawei has said it complies with all applicable export control and sanctions laws and other regulations.

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Battered Asia shares try to rally on talk of Fed pause

SYDNEY (Reuters) – Asian share markets tried to find their footing on Friday as speculation the Federal Reserve might be “one-and-done” with U.S. rate hikes helped salve some wounds after a punishing week.

MSCI’s broadest index of Asia-Pacific shares outside Japan nudged up 0.l3 percent, though that followed a 1.8 percent drubbing on Thursday.

Japan’s Nikkei added 0.9 percent and E-Mini futures for the S&P 500 edged up 0.1 percent.

Concerns over Sino-U.S. relations remain heightened after the arrest of smartphone maker Huawei Technologies Co Ltd Chief Financial Officer Meng Wanzhou, which threatened to chill talks on some form of trade truce. [nL1N1YA1YR]

Markets also face a test from U.S. payrolls data later in the session amid speculation the economy was heading for a tough patch after years of solid growth.

Fed Chairman Jerome Powell emphasized the strength of the labor market in remarks made late Thursday. [nL1N1YB2GD]

Economists polled by Reuters forecast jobs rose by 200,000 in November after surging 250,000 in October. [nL1N1Y91Q8]

“A view has developed of U.S. growth normalizing a little faster than expected from the fiscal ‘sugar rush’, while inflationary pressures remain contained given the sharp fall in the oil price,” said National Australia Bank economist Tapa Strickland.

“Payrolls will be very important in helping to validate whether the economy is indeed slowing faster than expected.”

The mood brightened a little after the Wall Street Journal reported Fed officials are considering whether to signal a new wait-and-see mentality after a likely rate increase at their meeting in December. [nL4N1YB5N6]

That only added to recent feverish speculation the central bank was almost done on hiking rates given concerns on global growth and the disinflationary impact of collapsing oil prices.

Interest rate futures <0#FF:> rallied hard in massive volumes with the market now pricing in less than one hike next year. A month ago they had been wagering on three increases.

The news helped Wall Street pare early steep losses and the Dow ended 0.32 percent lower, while the S&P 500 lost 0.15 percent. The Nasdaq even added 0.42 percent.

FLATTENED

Treasuries extended their blistering rally, driving 10-year yields down to a three-month trough at 2.8260 percent, before last trading at 2.8973 percent.

Yields on two-year notes fell a huge 10 basis points at one stage on Thursday and were last at 2.77 percent.

Investors also steamrolled the yield curve to its flattest in over a decade, a trend that has historically presaged economic slowdowns and even recessions.

“The sort of flattening of the yield curve that we have seen recently usually indicates that investors think the Fed is nearing the end of a tightening cycle, and that rate cuts may even be on the horizon,” argued analysts at Capital Economics.

The seismic shock spread far and wide. Yields on 10-year paper sank to the lowest in six months in Germany, almost 12 months in Canada and 16 months in Australia.

The sea change in expectations took a toll on the U.S. dollar as bulls had been counting heavily on a steady widening rate differential to propel the currency.

The greenback eased against a basket of currencies to 96.779, and fell to 112.69 yen from a 113.85 high at the start of the week. The euro was up around 0.5 percent on the week so far at $1.1376.

Cyber currency Bitcoin took another spill, sliding more than 6 percent to $3,446.17.

In commodity markets, gold firmed to near a five-month peak as the dollar eased and the threat of higher interest rates waned. Spot gold stood at $1,237.61 per ounce.

Oil was less favored, however, falling nearly 3 percent on Thursday after OPEC and its allies ended a meeting without announcing a decision to cut crude output. [nL8N1YB1II]

OPEC had tentatively agreed to cut output but was waiting for a commitment from non-OPEC heavyweight Russia before deciding volumes. [O/R]

Brent futures had ended with a loss of $1.21 at $60.67 a barrel. U.S. crude edged up 6 cents in early trade Friday to $51.55, having lost $1.31 overnight.

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Asia shares struggle to rally, oil skids further

SYDNEY (Reuters) – Asian shares fought to sustain the slimmest of recoveries on Friday amid speculation the Federal Reserve might be “one-and-done” with U.S. rate hikes, while oil fell anew as producers bickered over the details of an output cut.

MSCI’s broadest index of Asia-Pacific shares outside Japan nudged up 0.4 percent, though that followed a 1.8 percent drubbing on Thursday. Japan’s Nikkei added 0.8 percent.

Chinese shares, which were up earlier in the day, slipped into negative territory with the blue chips off 0.1 percent. E-Mini futures for the S&P 500 too started firmer but were last down 0.1 percent.

Spreadbetters, however, pointed to a strong start for Europe with London’s FTSE futures up 1.8 percent.

There was no escaping concerns over Sino-U.S. relations after the arrest of smartphone maker Huawei Technologies Co Ltd Chief Financial Officer Meng Wanzhou threatened to chill talks on some form of trade truce.

Markets also face a test from U.S. payrolls data later in the session amid speculation the economy was heading for a tough patch after years of solid growth.

Federal Reserve Chairman Jerome Powell emphasized the strength of the labor market in remarks made late Thursday.

Economists polled by Reuters forecast jobs rose by 200,000 in November after surging 250,000 in October.

“A view has developed of U.S. growth normalizing a little faster than expected from the fiscal ‘sugar rush’, while inflationary pressures remain contained given the sharp fall in the oil price,” said National Australia Bank economist Tapa Strickland.

“Payrolls will be very important in helping to validate whether the economy is indeed slowing faster than expected.”

The mood in risk-asset markets brightened a little after the Wall Street Journal reported Fed officials are considering whether to signal a new wait-and-see mentality after a likely rate increase at their meeting in December.

That only added to recent feverish speculation the central bank was almost done hiking rates given concerns about global growth and the disinflationary impact of collapsing oil prices.

Interest rate futures <0#FF:> rallied hard in massive volumes with the market now pricing in less than one hike next year. A month ago they had been wagering on three increases.

The news helped Wall Street pare steep losses and the Dow ended Thursday down 0.32 percent, while the S&P 500 lost 0.15 percent. The Nasdaq managed to advance 0.42 percent.

FLATTENED

Treasuries extended their blistering rally, driving 10-year yields down to a three-month trough at 2.8260 percent, before last trading at 2.89 percent.

Yields on two-year notes fell a huge 10 basis points at one stage on Thursday and were last at 2.76 percent.

Investors also steamrolled the yield curve to its flattest in over a decade, a trend that has historically presaged economic slowdowns and even recessions.

“The sort of flattening of the yield curve that we have seen recently usually indicates that investors think the Fed is nearing the end of a tightening cycle, and that rate cuts may even be on the horizon,” argued analysts at Capital Economics.

The seismic shock spread far and wide. Yields on 10-year paper sank to the lowest in six months in Germany, almost 12 months in Canada and 16 months in Australia.

The sea change in expectations took a toll on the U.S. dollar as bulls had been counting heavily on a steady widening rate differential to propel the currency.

The greenback eased against a basket of currencies to 96.803, and fell to 112.85 yen from a 113.85 high at the start of the week. The euro was up around 0.4 percent on the week so far at $1.1366.

Crptocurrency Bitcoin took a fresh spill to be down almost 18 percent for the week at $3,363.37.

In commodity markets, gold firmed to near a five-month peak as the dollar eased and the threat of higher interest rates waned. Spot gold stood at $1,239 per ounce.

Oil was less favored, however, falling further as OPEC delayed a decision on output cuts while awaiting support from non-OPEC heavyweight Russia.

Brent futures slipped 52 cents to $59.54 a barrel, while U.S. crude lost 40 cents to $51.09.

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U.S. stock futures fall, Asia follows after Canada arrests Huawei CFO

TOKYO (Reuters) – U.S. stock futures tumbled on Thursday and Asian markets followed after Canadian authorities arrested a top executive of Chinese tech giant Huawei Technologies, fanning fears of further tensions between China and the United States.

S&P500 e-mini futures ESc1 fell almost 2 percent at one point in thin Asian morning trade and were last were down 0.7 percent.

The Canadian Justice Department said Meng Wanzhou, deputy chair of Huawei, was arrested early this month and that she was sought for extradition by the United States.

The arrest heightened the sense of a major collision between the world’s two largest economic powers not just over tariffs but also over technological hegemony.

It also came as an inversion in the U.S. yield curve has stoked global investor worries of a possible U.S. recession.

Japan’s Nikkei .N225 slid 0.8 percent, with benchmark indexes in South Korea .KS11 and Australia down 0.6 percent and 0.2 percent, respectively.

Currencies were steadier, with major currencies little changed so far.

The euro traded flat at $1.1347 EUR= while the dollar dipped 0.1 percent against the yen to 113.01 JPY=. The yuan CNH= is also unmoved at 6.8660 in the offshore trade.

U.S. Treasuries futures TYv1 were also almost flat.

The benchmark Treasury 10-year yield US10YT=RR fell to its lowest point since mid-September on Tuesday while the five-year yield dropped below the two-year yield, causing a so-called inversion in the yield curve.

Because an inverted curve has often tended to precede a recession, investors were spooked by that.

U.S. markets were closed on Wednesday to mark the death of former President George H.W. Bush.

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Japan slides in key Asia corporate governance ranking, ties with India

HONG KONG (Reuters) – Japan slid three places to seventh in a widely watched ranking of corporate governance in Asia, tying with India but languishing behind the likes of Thailand and Malaysia.

The fall is part of a biennial survey by the Asian Corporate Governance Association (ACGA) and CLSA, the Asia-focused brokerage, and comes as governance in Japan is in the spotlight following the arrest last month of Nissan (7201.T) Chairman Carlos Ghosn for alleged financial misconduct.

Ghosn has yet to make any statement through his lawyers, but Japanese media reported that he has denied the allegations.

Japan, home to the world’s second-largest stock market, has been held up as a leading light by governance advocates after its stewardship code, introduced in 2014, pushed domestic fund managers into more actively questioning boards and management.

But the ACGA/CLSA report criticized a failure by Tokyo to take harder, regulatory action.

“While important, the focus on soft law rather than hard regulatory change means that regulators have not been addressing shortcomings in minority shareholder rights,” they said in their Corporate Governance Watch report, which has been grading countries in the region for more than a decade.

The report also warned that while Japanese efforts to improve governance by introducing better board-level oversight via independent directors and audit committees looked good on paper, boardroom reality had changed little in many firms.

Australia ranked top in the survey with a score of 71, despite revelations this year of widespread misconduct in its financial sector. Hong Kong and Singapore were next with 60 and 59 respectively. Japan was the biggest faller on 54.

While the report praised governance in Australia, both Hong Kong and Singapore were criticized after their stock exchanges changed rules this year to allow companies to list with two classes of shares.

Dual-class shares (DCS) offer extra voting power to top executives, which the bourses hope will attract large companies, particularly emerging technology giants, to list, but the structures are opposed by governance activists who warn that they can be abused by company insiders.

Jamie Allen, secretary general of the ACGA, said in the report that the association was concerned about the potential for “contagion” after the rule change in Hong Kong and Singapore, pointing to indications that South Korea was also considering changing its rules.

“Today advocates of DCS are trying to make it the new normal, accompanied by an obsessive focus on IPO (initial public offering) numbers as the only yardstick that seems to matter when measuring capital market success,” the report said.

China, the Philippines and Indonesia ranked bottom in the report, with scores of 41, 37 and 34 points respectively.

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Singapore not affected by tainted flu vaccines found in Hong Kong, Taiwan: HSA

SINGAPORE – Batches of flu vaccines from French manufacturer Sanofi Pasteur were found to contain impurities, reported Hong Kong and Taiwanese media earlier this week.

But Singapore is not affected as the products are not available here, said the Health Sciences Authority (HSA) in reply to queries from The Straits Times.

Hong Kong health authorities said 175,000 doses from a batch containing “white particles” had been delivered to the city’s public health care providers, while about 75,000 doses had been administered, said South China Morning Post (SCMP) on Tuesday (Nov 27).

Taiwanese news agency Focus Taiwan said on Monday that Taiwan’s Food and Drug Administration had confirmed that 518,000 doses had been found to contain suspicious white and black suspended matter.

The vaccines are supposed to be transparent liquids with no impurities.

The HSA told ST on Thursday: “The affected batches of Sanofi influenza vaccines reported by the Taiwan and Hong Kong health authorities were not supplied to the Singapore market and thus Singapore is not affected.”

Hong Kong’s Hospital Authority said all flu vaccination services had been suspended at hospitals and outpatient clinics, but were expected to resume gradually from Saturday.

“There has been no adverse reaction reported related to vaccinations with the affected batch,” the authority added.

Sanofi Pasteur said in a statement to SCMP that the vaccines had been made in France and there was no evidence that quality, safety or efficacy had been compromised.

The company said medical facilities stocking the affected batch would be contacted and the doses replaced.

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Asia stocks advance, dollar struggles on signs of more cautious Fed

TOKYO (Reuters) – Asian stocks advanced on Thursday, tracking a surge on Wall Street, after the chairman of the U.S. Federal Reserve suggested it may nearing an end to its three-year rate tightening cycle, boosting interest in riskier assets.

The dollar struggled and U.S. Treasury yields dipped after Jerome Powell said on Wednesday that U.S. policy rates were “just below” neutral, less than two months after saying rates were probably “a long way” from that point.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8 percent.

The Shanghai Composite Index edged up 0.2 percent, Australian stocks gained 0.5 percent and Japan’s Nikkei climbed 0.9 percent.

However, gains in Asia were tempered by investor jitters ahead of high-stakes trade talks between U.S. President Donald Trump and his Chinese counterpart Xi Jinping on Saturday on the sidelines of the G20 summit in Argentina.

Economists at ANZ pointed out that policy hawks in the Trump administration who want Washington to take a tough stance against Beijing appear to be in the ascendancy.

“They will want some concessions from China, not least of all on what they perceive is theft of intellectual

property and forced technology transfer,” wrote the ANZ economists.

“Thus, it would seem the prospect of the Trump-Xi meeting ending without a sustainable resolution to their differences is

relatively high.”

Analysts believe any signs of a thaw in U.S.-China tensions could trigger a knee-jerk rally but say the move would likely be short lived unless there are substantive compromise from both sides — most notably if Xi can persuade Trump to postpone a sharp tariff hike on Chinese goods due to take effect Jan. 1.

The Dow meanwhile rallied 2.5 percent and Nasdaq surged nearly 3 percent on Wednesday as Powell’s comments eased fears of a faster pace of rate hikes in 2019. [.N]

“Equities gained as Powell hinted of implementing fewer rate hikes when the economy is still doing well,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

“The likelihood of slower U.S. monetary tightening caused the dollar to slump against currencies, particularly the euro, which could soon benefit from an ECB rate hike.”

The euro was a shade higher at $1.1374 after advancing 0.7 percent the previous day.

The dollar dipped 0.2 percent to 113.46 yen after being knocked down from a two-week high above 114.00 scaled overnight.

The Australian dollar, sensitive to shifts in broader risk sentiment, jumped more than 1 percent on Wednesday and last stood little changed at 0.7302 .

The dollar index against a basket of six major currencies was effectively flat at 96.805 following an overnight loss of 0.6 percent.

The U.S. two-year Treasury yield extended a modest decline from the previous day following Powell’s comments. The yield was down about 1 basis point at 2.796 percent.

Oil prices clawed back some ground from losses in the previous session, but an increase in U.S. crude inventories and uncertainty in the run to an OPEC meeting next week kept markets under pressure. [O/R]

U.S. crude futures were up 0.8 percent at $50.66 per barrel after sliding 2.5 percent the previous day.

Brent crude rose 0.6 percent to $59.13. It has slumped 21 percent this month, during which it fell to a 13-month trough of $58.41.

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Hints of fewer rate hikes boost Wall Street, dollar dips

NEW YORK (Reuters) – Comments by U.S. Federal Reserve Chair Jerome Powell that interest rates were “just below” neutral propelled Wall Street higher on Wednesday, easing investor worries about the pace of interest rate hikes next year.

Hopes that the United States and China could call a trade war ceasefire at the upcoming G20 summit also helped stocks.

Meanwhile, the dollar retreated with potentially fewer rate increases on the horizon, and sterling rose after the Bank of England said the economy could shrink by as much as 8 percent in about a year after a no-deal Brexit.

Equity investors reacted favorably to the comments by Powell, who indicated there may not be as many future interest rate hikes from the central bank as was initially anticipated.

“He gave the market, and presumably President Trump, exactly what he wanted, which was an admission that the previously proposed path of future rate hikes was probably too aggressive,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York.

U.S. President Donald Trump has recently been critical of the Fed for raising rates.

The Dow Jones Industrial Average rose 546.57 points, or 2.21 percent, to 25,295.3, the S&P 500 gained 45.25 points, or 1.69 percent, to 2,727.42 and the Nasdaq Composite added 148.44 points, or 2.1 percent, to 7,231.14.

The pan-European STOXX 600 index was down 0.01 percent and MSCI’s gauge of stocks across the globe gained 0.08 percent.

Earlier, hopes for a U.S.-China truce on trade had also helped lift equities.

Despite Trump’s tough remarks on the trade dispute ahead of Saturday’s meeting with Chinese President Xi Jinping, markets focused on comments by White House economic adviser Larry Kudlow, who indicated the two countries could call a truce.

“If they come out with nothing this weekend, it’s going to be very bad,” said Bernd Berg, global macro strategist at Swiss-based Woodman Asset Management.

Still, lingering caution that the two sides would leave the summit without an agreement capped gains in Europe, where auto stocks were under pressure after a report Trump may soon impose new import tariffs.

A rapprochement between the United States and China is seen as crucial, given that world growth and trade are already showing signs of an alarming slowdown.

Uncertainty over global trade as well as Brexit and Italy’s conflict with the European Union, had supported the U.S. dollar, but the dollar index dipped 0.35 percent after Powell’s comments.

The euro was up 0.74 percent to $1.1371.

Sterling, meanwhile, gained 0.7 percent after the Bank of England warned about the economic risks from exiting the European Union without a deal.

It said, Britain risks suffering an even bigger hit to its economy than during the global financial crisis 10 years ago if it leaves the European Union in a worst-case Brexit scenario.

“Our jobs is not to hope for the best but to prepare for the worst,” BoE Governor Mark Carney said.

Some market participants took the remarks as a good sign.

“I think he’s assuaging fears, saying that they’re willing to do anything they need to do,” said Michael Skordeles, U.S. macro strategist at SunTrust Advisory Services in Atlanta, regarding the bank’s response to Brexit. “That’s helping global markets generally.”

U.S. government bond prices were mixed following the Fed chair’s speech.

Benchmark 10-year notes last rose 3/32 in price to yield 3.0462 percent, from 3.057 percent.

The 30-year bond last fell 6/32 in price to yield 3.3302 percent, from 3.32 percent.

Oil slipped below $60 a barrel, continuing a recent run of losses, after U.S. crude inventories rose for the 10th week in a row and investors worried about whether OPEC-led producing countries would reach an accord next week on output cuts.

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World Trade Organization (WTO) outlook: tmsnrt.rs/2RlhEOc

Brent crude oil price slumps of 2008, 2014/2015 & 2018 in percent: tmsnrt.rs/2RiWkJ1

Graphic: Global assets in 2018 – tmsnrt.rs/2jvdmXl

Graphic: World FX rates in 2018 – tmsnrt.rs/2egbfVh

Graphic: Emerging markets in 2018 – tmsnrt.rs/2ihRugV

Graphic: MSCI All Country World Index Market Cap – tmsnrt.rs/2EmTD6j

Graphic: The rolling bear market – tmsnrt.rs/2QCzyvm

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World stocks climb to one-week high on hopes of trade reconciliation

LONDON (Reuters) – Hopes for a thaw in U.S.-China trade relations at the upcoming G20 summit helped world shares inch to a one-week high on Wednesday, though fears of a no-deal outcome weighed on European bourses and kept the dollar firm for the fourth day in a row.

While President Donald Trump talked tough on the trade tariffs issue ahead of a meeting with Chinese President Xi Jinping on Saturday, markets focused on comments by White House economic adviser Larry Kudlow, who held open the possibility that the two countries would reach a trade deal.

Kudlow’s comments helped Wall Street close higher and allowed Chinese and Japanese shares to rally 1 percent. MSCI’s index of Asian shares outside Japan gained 0.7 percent.

But the mood fizzled somewhat into the European session, with the pan-European index giving up opening gains to trade flat and Germany’s export-heavy bourse slipping 0.2 percent.

A Tuesday report that Trump may soon decide about new taxes on imported cars, still weighed on sentiment, keeping Europe’s auto sector shares 0.6 percent in the red

“An expectation is being priced into markets ahead of the G20 meeting that we will see some deal or at least a framework for a deal between Trump and (Chinese President) Xi Jinping,” said Bernd Berg, global macro strategist at Switzerland-based Woodman Asset Management.

“But if they come out with nothing this weekend, it’s going to be very bad.”

Futures pointed to a marginally firmer open on Wall Street.

The uncertainty over global trade as well as Brexit and Italy’s conflict with the European Union, have supported the U.S. dollar, which rose to a two-week high against a basket of currencies.

While the main driver for the greenback is the U.S. interest rate path, Rodrigo Catril, senior strategist at National Australia Bank, said it was also benefiting from the uncertain mood.

“Markets seem to be jumping at shadows at the moment and against this backdrop of uncertainty, the dollar remains the preferred option for weathering the storm,” Catril said.

With the currency index approaching 1-1/2-year highs reached earlier this month, traders are focusing on a speech at 1700 GMT by Federal Reserve Chair Jerome Powell to see if he offers clues on how many more times the Fed could raise interest rates.

While Fed Vice Chair Richard Clarida took a less dovish stance on Tuesday than some had expected and backed more rate rises, Powell and his colleagues have in recent weeks alluded to global volatility, leading many to speculate the bank’s three-year-long rate rise campaign could pause in 2019..

Berg said there had been some repricing of rate-rise expectations but said the Fed remained on track to tighten policy in December and early-2019 at least.

“My base case is the dollar will strengthen versus the euro and pound into year-end, as the euro zone and Britain are both struggling with their own problems — Brexit and Italy,” Berg said.

Sterling was flat around $1.2754, just off two-week lows, as British Prime Minister Theresa May battles to convince skeptical voters, lawmakers and businesses of the benefits of her Brexit deal.

May needs to win a Dec. 11 parliamentary vote on the deal she has negotiated with the EU to exit the bloc but with most parties opposed, that looks unlikely.

The euro is languishing at $1.1286, also near two-week lows to the dollar.

Investors are monitoring developments in Italy’s row with the EU over its budget spending, with Germany’s Handelsblatt and Italy’s La Stampa quoting EU commissioner Valdis Dombrovskis as saying the draft budget needed “substantial correction”.

Italian bond yields flatlined after sharp rallies that were triggered by what appeared to be a more conciliatory stance from the government over the issue.

On other markets, cryptocurrency bitcoin jumped 6 percent to above $4,000, extending its rebound from a low of $3,475 touched on Sunday.

Brent oil futures rose almost one percent ahead of next week’s OPEC meeting at which the producer club could decide on supply cuts to counter a crude glut. But prices are still down by almost one-third since early October.

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