February 17, 2017 / 8:27 AM / 6 months ago

Daily Briefing: Reassurance mission for Pence

U.S. Vice President Mike Pence attends the swearing-in ceremony of Office of Management and Budget Director Mick Mulvaney at the executive office in Washington, U.S., February 16, 2017.Carlos Barria

LONDON (Reuters) - U.S. Vice President Mike Pence travels to Munich for the annual security fest there starting today with a mission to reassure European allies rattled by his boss's shoot-from-the-hip utterances on foreign policy.

In meetings with Germany's Angela Merkel and the leaders of Ukraine and the Baltic states, Pence will insist that the United States remains committed to NATO, will not abandon Ukraine and backs the current set of sanctions on Russia. He'll also have his work cut out explaining U.S. policy on the Middle East after Donald Trump questioned the primacy of the two-state solution for Israel and the Palestinians.

Probably the big headline on Brexit today will be ex-premier Tony Blair's speech at a conference in London in which he will argue that Britons should be given the right to change their mind on it if the type of exit at the end of negotiations does not live up to their hopes. That of course depends on two factors: first, that Article 50 is reversible, and second, that the other members of the EU would have Britain back. Neither is guaranteed.

Separately, European Commission President Jean-Claude Juncker -- whose staff are charged with negotiating Brexit -- has told journalists in Germany that a deal can't be done within the two-year deadline set by Article 50.

An interesting story is developing in Hungary where a newspaper is reporting that enough signatures have been collected to force a referendum on whether the country should run to host the 2024 Olympics.

Opponents of the bid argue that the country is just not rich enough for now to fund a project like this. Prime Minister Viktor Orban, an authoritarian who likes getting his way, supports the bid but has said he will accept the will of the people on this one.

MARKETS AT 0755 GMT

European shares are set to open higher and the dollar is up slightly against other major currencies but holding near one-week lows and heading for its sixth losing week in eight. After a week when global stocks hit record highs, markets are taking a breather. The prospect of tax cuts from U.S. President Donald Trump has spurred this week’s gains but investors are wondering when they will get some details to get their teeth into. Oil is up, with traders citing a Reuters report that OPEC could extend its output cuts.

The pan European STOXX 600 index is on track to end its second straight week of gains and remains near its highest level in 13 months, underpinned by a rally in miners and financial stocks as well as a strong earnings season. More than half of the STOXX 600 companies have already reported their results with 55 percent of them delivering an earnings beat.

Shares in Allianz are up more than 3 percent in pre-market trade after Europe's biggest insurer proposed a 3 billion euro share buy-back after it posted higher than expected profits and said it was adjusting its policy on budgeting for possible takeovers. Still in the insurance sector, the Nederland's Aegon posted a better-than-expected underlying pretax profit growth for the fourth quarter. Stada is expected to get a boost after the German generic drugs company said it had received a third takeover approach. It did not identify the suitor but said the offer is worth 58 euros per share, above its current market rice and two euros higher than Cinven Partners' offer.

Asian shares are down 0.2 percent but will still notch up a fourth week of gains, Tokyo closed 0.6 percent lower and Wall Street ended just about flat.

As European trading starts, the dollar is up 0.2 percent at 113.40 yen and the euro is down 0.1 percent at $1.0665. Euro zone government bond markets are still being driven by Thursday’s ECB minutes that hinted at “deviations” in how the bank buys bonds under QE. This is seen helping the most indebted countries. One such, Italy, is heading for its first week of falling yields in five.

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