Pound bobs on Brexit, European stocks recover from Huawei scare

Pound bobs on Brexit, European stocks recover from Huawei scare

British pound
Sterling struck US$1.1959 in early European business, its worst trading level since 1985 with the exception of a 2016 "flash crash" which took it even lower for a very short moment. (AFP/PAUL ELLIS)

LONDON: Relief that the United States took a step away from imposing crushing restrictions on Huawei helped European stocks recover on Tuesday (May 21), while the pound whiplashed on fresh Brexit drama.

After hitting a four-month low at US$1.2685 the pound shot higher on speculation Prime Minister Theresa May was poised to offer lawmakers a chance to vote on holding a second Brexit referendum.

May outlined in a speech to lawmakers a series of incentives for MPs to support her Brexit deal, including the possibility of a vote on holding a second referendum, saying there was "one last chance" to end the deadlock.

Stocks took a hit on Monday after Google said it was beginning to sever ties with Chinese telecoms giant Huawei, days after US President Donald Trump's decision to bar it from the US market.

The Huawei development - with the US citing national security concerns - has ratcheted up pressure in the trade stand-off between Washington and Beijing, which was once thought to have been close to conclusion.

But the decision late Monday by the US Commerce Department to issue a 90-day reprieve on the ban on dealing with Huawei was greeted by markets on Tuesday with relief.

"Stock markets in Europe have rallied today on the back of the news that the US granted Huawei a 90-day extension before the ban will be implemented," said market analyst David Madden at CMC Markets UK.

"This is seen as a sign the US administration don't want to turn up the heat on China just yet, but the ball is in Beijing's court," he said.

"The trade standoff is still very much alive, but this appears to be a slight reduction in hostilities, and some traders are taking the opportunity to snap up equities."

Europe's main markets closed higher, while Wall Street was in the green approaching midday.

In commodities trading, oil prices dipped after major producers said supplies were sufficient and stockpiles still rising.

Key figures around 1530 GMT:

Pound/dollar: UP at US$1.2762 from US$1.2725 at 2050 GMT

Euro/pound: DOWN at 87.47 pence from 87.72

Euro/dollar: UNCHANGED at US$1.1165

Dollar/yen: UP at 110.65 yen from 110.04 yen

London - FTSE 100: UP 0.3 per cent at 7,328.92 points (close)

Frankfurt - DAX 30: UP 0.9 per cent at 12,143.47 (close)

Paris - CAC 40: UP 0.5 per cent at 5,385.46 (close)

EURO STOXX 50: UP 0.5 per cent at 3,385.56

New York - Dow: UP 0.5 per cent at 25,810.72

Tokyo - Nikkei 225: DOWN 0.1 per cent at 21,272.45 (close)

Hong Kong - Hang Seng: DOWN 0.5 per cent at 27,657.24 (close)

Shanghai - Composite: UP 1.2 per cent at 2,905.97 (close)

Oil - Brent Crude: DOWN 19 cents at US$71.78 per barrel

Oil - West Texas Intermediate: DOWN 19 cents at US$71.78 per barrel

Source: AFP/de

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