July 2, 2018 / 3:42 AM / 3 months ago

GLOBAL MARKETS-China shares slip anew, Mexico peso up as Obrador wins

* Mexico exit polls point to clear win for leftist Obrador

* China shares ease, markets count down to tariff deadline

* Euro wobbles on threat to German/EU immigration deal

* Oil off as Trump says Saudis ready to expand supply

By Wayne Cole

SYDNEY, July 2 (Reuters) - Asian share markets were burdened by fresh losses in China on Monday, while Mexico’s peso firmed as exit polls pointed to a decisive victory for presidential front-runner Andres Manuel Lopez Obrador’s party.

Dealers said the clear win would at least settle one source of political uncertainty. Yet leftist Obrador is also expected to inject a dose of nationalism into government and sharpen divisions with U.S. President Donald Trump.

The dollar was down 0.7 percent at 19.7686 pesos, not far from last week’s trough around 19.5580.

Trump also loomed large in oil markets with crude taking a spill after he tweeted that Saudi Arabia had agreed to lift oil production by “maybe up to 2,000,000 barrels”. The missive was later downplayed by the White House and Saudi Press Agency.

Brent crude lost $1.06 to $78.71 a barrel, while U.S. crude fell 94 cents to $73.21. The pullback was modest given U.S. crude rallied more than 8 percent last week, while Brent gained more than 5 percent.

In equity markets, Shanghai blue chips resumed their slide with a fall of 1.3 percent and soured sentiment in the region. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.16 percent, having shed 2 percent last week.

Japan’s Nikkei dropped 0.5 percent, with a survey of manufacturers showing sentiment had darkened a shade in the face of trade war threats.

The purchasing managers’ index (PMI) still edged higher for June, though exports orders softened.

Tension is growing ahead of a July 6 deadline when the U.S. is due to impose US$34 billion of tariffs on Chinese exports.

“The key risk for the market isn’t that Trump actually implements his trade threats but rather that a protracted period of trade uncertainty begins to weigh on economic activity,” said analysts at JPMorgan in a note.

“The evidence suggesting this is happening is far from conclusive, but ominous data points are accumulating.”

Two surveys of Chinese manufacturing out in the last few days showed a slight pullback in activity, partly due to softness in exports.

A slew of factory readings from across the globe are due on Monday, while the U.S. ISM report is out on Tuesday. Minutes of the last Federal Reserve policy meeting come on Thursday and the week closes with U.S. payrolls for June.

A DEAL, OR NOT?

In currency markets, the euro took an early knock on reports German Interior Minister Horst Seehofer had rejected a migration deal German Chancellor Angela Merkel negotiated at a European Union summit on Friday.

The currency then bounced on news Seehofer had offered to step down as minister and as chair of his Christian Social Union (CSU) party.

The move makes the future of Merkel’s government even more uncertain as her Christian Democrats party (CDU) relies on the CSU to maintain power through a coalition formed three months ago to end a political vacuum.

After all that, the euro was 0.2 percent easier at $0.1662 , having skidded as far as $1.1632 at one stage.

The U.S. dollar was a touch firmer on a basket of currencies at 94.720, having recoiled from a 95.324 top on Friday. It added 0.3 percent on the yen to 110.97 and was again testing stiff resistance above 111.00.

Editing by Simon Cameron-Moore and Sam Holmes

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