Stock markets mostly rise, pound enjoys bounce

(MENAFN- AFP) Stock markets mostly rose Wednesday -- but London and Milan were weighed down as Britain detailed the economic impact of Brexit on UK growth and a top EU official rejected Italy's concession over a planned budget deficit.

Also on the radar is a speech later in the day by Fed boss Jerome Powell, which comes a day after Vice Chairman Richard Clarida hinted at a more cautious approach over US interest rate rises.

Expectations that rates would continue to rise through to 2020 -- making it more expensive to borrow for investing -- have weighed on global markets this year.

Powell's speech also comes a day after US President Donald Trump said he was "way off base" for continuing with his tightening policy.

The dollar was down against the pound on Wednesday.

"Realistically, sterling’s gains came from issues with the dollar and the euro, not any (UK) domestic strength," said Connor Campbell, analyst at Spreadex trading group.

"The greenback may be in retreat following Larry Kudlow’s attempts to ease investors’ trade war fears -- the dollar now less immediately needed as a safe haven -- while the single currency was hurt by a dip in German consumer confidence."

Wall Street provided a positive lead Wednesday following soothing comments from top White House economic advisor Kudlow on the chances of a trade deal when the leaders of the world's top two economies meet Saturday.

In London, the government on Wednesday said that the British economy could be 9.3 percent smaller than it would otherwise be in 15 years' time if Britain crashes out of the EU without a deal.

The government's current plans for post-Brexit ties with the European Union would still cost the economy, but only by around 3.9 percent of gross domestic product, the report said.

Around 1200 GMT, London's benchmark FTSE 100 index was down 0.3 percent.

In the eurozone, Frankfurt's DAX 30 index was flat, the Paris CAC 40 gained 0.2 percent and Milan's FTSE MIB was unchanged compared with the close Tuesday.

A reduction in Italy's public deficit to 2.2 percent, as some government officials have suggested, would be insufficient to avoid EU sanctions, European Commission Vice President Valdis Dombrovskis said Wednesday.

The European Commission last month rejected the budget submitted by Italy's populist government, as the deficit was considerably higher than the 0.8 percent the previous centre-right government had planned.

Elsewhere on Wednesday, Asian stock markets advanced on hopes for a positive outcome from US Trump's high-stakes trade talks with his Chinese counterpart Xi Jinping.

Hong Kong had jumped 1.3 percent by the close, Shanghai gained 1.1 percent and Tokyo won one percent.

The remarks came a day after Trump warned that if he cannot reach a deal with Xi he expects to increase tariffs on $250 billion of Chinese goods and impose levies on all the other goods the US imports from the country.

While observers do not expect a wide-ranging deal to be made at the meeting, which is to take place on the sidelines of a G20 summit in Buenos Aires, there is the possibility of an agreement that will allow the two to reach a deal down the line.

- Key figures around 1200 GMT -

London - FTSE 100: DOWN 0.3 percent at 6,997.63 points

Frankfurt - DAX 30: FLAT at 11,308.12

Paris - CAC 40: UP 0.2 percent at 4,991.50

Milan - FTSE MIB: FLAT at 19,141.77

EURO STOXX 50: UP 0.3 percent at 3,174.32

Tokyo - Nikkei 225: UP 1.0 percent at 22,177.02 (close)

Hong Kong - Hang Seng: UP 1.3 percent at 26,682.56 (close)

Shanghai - Composite: UP 1.1 percent at 2,601.74 (close)

New York - Dow Jones: UP 0.4 percent at 24,748.73 (close)

Pound/dollar: UP at $1.2805 from $1.2729 at 2140 GMT

Euro/pound: DOWN at 88.16 pence from 88.71 pence

Euro/dollar: DOWN at $1.1284 from $1.1293

Dollar/yen: DOWN at 113.75 yen from 113.79

Oil - Brent Crude: DOWN 26 cents at $59.95 per barrel

Oil - West Texas Intermediate: DOWN six cents at $51.50

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