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* Sterling pares gains as Brexit deal nagged by doubts
* Lack of support from Northern Irish partners a snag
* Dollar weak as U.S. retail sales fall for first time in 7 months
By Marc Jones and Herbert Lash
LONDON/NEW YORK, Oct 17 (Reuters) - A deal on Britain’s departure agreed with the European Union sent sterling to a five-month high on Thursday and hoisted European stocks to a year-and-a-half peak before doubts about UK parliamentary support hauled them back.
Wall Street rose as upbeat earnings from Netflix and Morgan Stanley affirmed a strong start to the U.S. reporting season while the dollar fell against the euro as the common currency got a lift on the long-awaited Brexit deal.
While the British government and the EU may have reached a deal, the road ahead is unclear. The Irish border riddle remains a sticking point for Northern Ireland’s Democratic Unionist Party (DUP), which has withheld its backing.
That reduces the chances of British Prime Minister Boris Johnson winning parliamentary ratification at an extraordinary session of parliament on Saturday.
But after weeks of negotiations, an agreement being struck was welcomed by British and EU leaders.
“Where there is a will, there is a deal - we have one!” said European Commission President Jean-Claude Juncker as the news broke from Brussels.
Sterling, the key gauge of Brexit sentiment all along, jumped as much as a 1% against the dollar, putting it on course for its best six-day gain in more than 30 years before the doubts and grumbles set in.
Market optimism faltered when the Northern Ireland party said it could not support the agreement, torpedoing hopes of a smooth passage through parliament.
Having ran up as far as $1.2988, sterling fell well under $1.28 before regaining momentum to trade at $1.2857, up 0.21% on the day.
London’s benchmark FTSE index jumped 0.61% as the pound slid but the broad-market pan-European STOXX 600 lost most of its gains, rising 0.17%. The FTSEurofirst index of leading regional shares rose 0.17%.
UK Gilts, German Bunds, gold and most other safe havens also rebounded after selling off.
Netflix Inc shares rose 2.3% in heavy trade after the video streaming service provider added slightly more paying subscribers than Wall Street expected in the third quarter.
Morgan Stanley gained 3.1% after the big lender beat analysts’ expectations for quarterly profit, buoyed by higher revenue from bond trading and M&A advisory fees.
Earnings season is dictating U.S. market moves, which has historically been the case, said Kristina Hooper, chief global market strategist at Invesco.
“The buck stops with earnings,” Hooper said. “The good news is most earnings reports thus far have been positive and that’s provided some nice momentum for the market.”
The Dow Jones Industrial Average rose 48 points, or 0.18%, to 27,049.98. The S&P 500 gained 10.07 points, or 0.34%, to 2,999.76 and the Nasdaq Composite added 21.56 points, or 0.27%, to 8,145.74.
Emerging-market stocks also gained for a sixth day - their longest winning streak since early April - after U.S. Treasury Secretary Steven Mnuchin said U.S. and Chinese trade negotiators were nailing down a Phase 1 trade deal text for their presidents to sign next month.
But U.S. retail sales fell for the first time in seven months, suggesting manufacturing-led weakness was spreading to the broader economy. U.S. consumption has been one of few bright spots in the global economy, so the data fanned concerns the trade war would ultimately tip the world into recession.
The dollar index fell 0.37%, with the euro up 0.43% to $1.1118. The Japanese yen strengthened 0.20% versus the greenback at 108.58 per dollar.
Oil prices fell as industry data showed a larger-than-expected increase in U.S. inventories, though the drop was limited by the Brexit deal.
Brent crude futures fell 25 cents to $59.17 a barrel. U.S. West Texas Intermediate crude lost 24 cents to trade at $53.12.
Reporting by Herbert Lash Editing by Sonya Hepinstall