LONDON May 31 Stocks flatlined on Wednesday as
investors used the last day of May to protect gains built up in
what has been yet another lucrative month, while sterling fell
after an opinion poll suggested the ruling Conservatives could
lose seats in next week's UK general election.
World stocks are poised to end May up nearly 2 percent,
marking the seventh straight monthly increase and the longest
monthly winning streak in over a decade.
MSCI's global equity index held steady on
Wednesday, while European stocks edged down 0.1 percent in early
trade following Wall Street's dip on Tuesday
Asian shares drew some support from data that showed
activity in China's manufacturing sector grew at the same pace
in May as in April, although a sturdy performance from the
Japanese yen helped push the Nikkei into the red.
The biggest mover in currencies was sterling, which shed 0.3
percent after a YouGov poll showed the ruling Conservative Party
might lose 20 of the 330 seats it holds while the opposition
Labour Party could gain nearly 30 seats.
"The return of U.S. and UK markets yesterday (after
holidays) saw a little bit of weakness creep in as we head into
month end and what has been a positive month for markets, with
records broken on an almost daily basis," said Michael Hewson,
chief markets analyst at CMC Markets.
"This soft tone looks set to be carried over this morning,"
The main pan-European indexes were slightly lower early on
Wednesday, Germany's DAX was flat and sterling's
weakness helped lift Britain's FTSE 100 by 0.2 percent.
U.S. futures pointed to a rise of 0.1 percent on Wall Street
THE MONTH OF MAY
Activity in China's manufacturing sector grew at the same
pace in May as in April, with a headline reading of 51.2,
official data showed, in a reassuring sign the world's
second-biggest economy is not losing too much steam after a
solid first quarter performance.
Analysts had seen a slight slowing to 51.0.
European markets could take their cue later in the day from
euro zone inflation data, which are expected to show a sharp
slowdown to 1.5 percent in May from 1.9 percent April.
If confirmed, the European Central Bank may be less inclined
to signal the start of the process of withdrawing its huge
policy stimulus at its meeting next week, analysts said.
The euro was holding steady just under $1.12, while
10-year German bond yields were up a basis point at 0.305
The dollar was steady against the yen at 110.85 yen,
and the 10-year U.S. Treasury yield was up a basis point at
2.227 percent. Two weeks ago it was at 2.41 percent.
Sterling fell as low as $1.2791, near a one-month
low of $1.2775 touched on Friday before recovering some ground
to $1.2810. It also slipped to 0.8738 pound per euro
, near Friday's eight-week low of 0.8750.
New constituency-by-constituency modelling by YouGov showed
the ruling Conservative Party might lose 20 seats at the June 8
election while Labour could gain nearly 30 seats, potentially
leading to a hung parliament, The Times said.
The news came after a string of opinion polls showed a
narrowing lead for prime minister Theresa May's Conservatives,
shaking investors' confidence that she would easily win a
majority and strengthen her hand in the Brexit negotiations.
"We're getting very negative on sterling again," said George
Saravelos, FX strategist at Deutsche Bank.
"If May is unable to deliver a substantially increased
majority, her ﬂexibility to negotiate will not have improved. A
strong Conservative majority is also only a necessary, not
sufficient condition for a smooth Brexit," he said.
In commodities, oil prices remained soft, as concerns
lingered about whether the extension of output cuts by OPEC and
other producing countries will be enough to support prices.
U.S. crude futures fell 0.9 percent to $49.21 a
barrel. Global benchmark Brent was down 0.8 percent at
$51.44 per barrel.
Gold was flat at $1,263 an ounce.
(Reporting by Jamie McGeever; editing by xxxxxx)