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LONDON, March 31 (Reuters) - Following are five big themes likely to dominate thinking of investors and traders in the coming week and the Reuters stories related to them.
U.S. and Chinese presidents Donald Trump and Xi Jinping meet at one of Trump's resort hotels in Florida next week. The talks will set the tone of the relationship between the world's two biggest economies for the next few years and will reveal just how hard Trump is likely to play things with China on issues ranging from trade protectionism and currency manipulation to North Korea. Having been scuppered in his attempts to scrap Obamacare, Trump might see this as a good opportunity to show the American people some muscle flexing. He has already fired a few shots on Twitter, saying it will be a "very difficult" meeting and that the U.S. "can no longer have massive trade deficits and job losses."
* China downplays tensions with U.S. and Xi prepares to meet Trump
* Trump says trade gap will make China meeting 'a very difficult one'
* Trump to order trade abuses study, improve import duty collection
Major currency markets are in one of those downbeat moments where no clear trend prevails. The opening salvoes of Donald Trump's presidency have not delivered the surge many predicted last year for the dollar. The belief in a steady reeling-in of European monetary stimulus that drove the euro higher in the past fortnight has also abated. No-one wants to back the pound through Brexit talks. And it would take a deeper and more longer-lasting correction in equities markets to build any faith in the yen. So possibly, we go back to the start and the higher U.S. yields that fundamentally support the greenback. GDP on Thursday was strong, some Fed officials predict up to three more hikes and another solid non-farm payrolls read on Friday would have the market thinking about some clear signalling for another rise in June. Unless Donald says, or tweets, different...
* Euro hits two-week low as inflation lags expectations
* Huge range of sterling forecasts clouds horizon
* Fed's Rosengren says sees 3 further rate hikes this year
The first stage of the European Central Bank's slow withdrawal of monetary stimulus next week may throw into sharp relief the have- and have-nots in the bloc's debt markets. Weaker, so-called peripheral states like Portugal and Italy are seen as most dependent on the trillions of euros the ECB has spent over the past few years to shore up growth and inflation. But some investors worry an era of rock-bottom rates has papered over the cracks for countries which have not delivered the structural reforms needed to put their economies on a steadier footing. When the ECB from Monday trims its monthly bond purchases from 80 billion to 60 billion euros, it will be a major test of confidence in these countries and how they can withstand a return to normal monetary conditions in the future.
* Bonds of euro zone laggards quiver with ECB poised to trim QE
* Legitimate to review ECB pledge to keep rates at bottom: Coeure
* Spooked by yield rise, ECB wary of changing message again
The revolving doors at South Africa's finance ministry are spinning again. After days of speculation, President Jacob Zuma finally reshuffled his cabinet, sacking his Finance Minister Pravin Gordhan. The decision to remove Gordhan -- seen as a guarantor of steady policymaking by many investors -- spooked markets, sending the rand tumbling and bond yields soaring. The turmoil also exposed deep rifts within the government. Zuma's deputy Cyril Ramaphosa told his boss he did not agree with the move, bank and business leaders in Africa's most industrialised economy have come out in force in their criticism and the opposition has mooted a motion of no-confidence against Zuma. Markets are closely watching out for reaction from credit ratings agencies which could see South Africa lose its coveted investment-grade status, making it more costly for the country to borrow.
* South Africa's ANC divided, Zuma weakened by cabinet reshuffle
* BREAKINGVIEWS-Gordhan exit is dual blow for South African debt
* S.Africa's Gordhan says intelligence report used to fire him "nonsense"
* Fitch: South Africa cabinet reshuffle signals policy change
The first quarter began with a bang across global equity markets though Europe still lagged its developed market peers. Over the course of the three months, however, two things changed. Firstly, a steady stream of better economic data trumped the fuzzy risks about geopolitics drawing investors back into a stock market trading at valuation discounts to the others. Secondly, banks and mining stocks -- the biggest beneficiaries of the reflation rally -- gave way to tech, which ends Q1 as the best performing sector in Europe as well as the most expensive on a price-to-earnings basis. Global investor interest in Europe is stirring back to life and the hunt is on to seek out stocks and sectors that stand to benefit the most from a revival in economic growth, inflation and the brightest earnings outlook for the region in seven years.
* Europe sector performance YTD: bit.ly/2h3SjpY
* Investors bet on a quiet tech revolution in Europe
* Europe back in vogue as Trump bulls pull in horns – BAML (Compiled by Dhara Ranasinghe; Editing by Catherine Evans)