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StockBeat: Markets Tread Water as Trade Hope Balances Powell Effect

By Geoffrey Smith

Investing.com -- Europe’s stock markets are treading water after early trading on Wednesday, with one eye already on the weekend’s G20 summit meeting that will show how much, or how little, the U.S. and China care about ending their trade dispute.

A report by Bloomberg that the U.S. is willing to cancel tariffs on $300 billion worth of previously unaffected imports from China, which are scheduled to come into force next week, has eased concerns about an immediate escalation of the dispute, but has not been enough to encourage much new risk-taking ahead of the weekend.

By the same token, markets have read mixed messages into a speech by Federal Reserve Chairman Jerome Powell after the European close on Tuesday, in which Powell defended the principle of central bank independence – a sign of his unwillingness to take orders from President Trump on where interest rates should be set – but otherwise reaffirmed the Fed’s bias toward easing if the economy shows any further sign of slowing.

By 4:45 AM ET (0845 GMT), the main indexes were mixed, ranging from a 0.3% drop in Switzerland a to a similar-sized rise in Spain. The benchmark Euro Stoxx 600 was down 0.2% at 382.64, on course for a fourth straight day of – admittedly relatively modest – losses.

Among the notable blue-chip movements, industrial group Thyssenkrupp (DE:TKAG) was up over 5% on a report in the German newsletter Platow-Brief that Finland's KONE (HE:KNEBV) is preparing a bid for its elevator business, a deal that would unlock much of the value in the group.

Tobacco stocks were relatively unmoved by news that San Francisco had become the first U.S. city to ban vaping, a move that, if replicated elsewhere across the U.S., could seriously dent demand for the industry’s great hope for the future. British American Tobacco (LON:BATS) was down 0.4%, but Imperial Brands (LON:IMB) was up 0.9%.

And Europe’s oil and gas stocks were broadly higher after the American Petroleum Institute reported a large draw in U.S. crude inventories last week, adding to indications that oil prices may be finding a floor after a steep drop in the second quarter. BP (LON:BP) and Royal Dutch Shell (AS:RDSa) were both up 0.5%, while Spain's Repsol (MC:REP) led the way with a 1.0% gain.

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