LONDON (Reuters) - In what would be a setback for the Brexiter vision of a free-trading Global Britain, China and Japan are both reported to be irked by British diplomacy - or the lack of it.
China is said to have cancelled a round of trade talks after Defence Secretary Gavin Williamson threatened last week to deploy a warship in the Pacific; the FT now reports that Tokyo has bristled at clumsy UK attempts to chivvy along talks on a deal similar to the EU-Japan one just concluded.
The government is playing down both reports, but Williamson's gung-ho speech in particular is likely to face criticism in a parliament debate on defence matters today.
In the meantime, news is emerging this morning of a separate spat in which Gibraltar is accusing a Spanish warship of trying to order commercial vessels out of their anchorages in the British territory; details remain patchy at present.
Prosecutors in Sicily want to pursue an investigation for alleged abuse of power and kidnapping that began when Salvini ordered some 150 migrants be held onboard an Italian coast guard ship for five days in August.
The fate of that investigation will be decided by a committee of the Italian senate: the on-line vote from 0900-1800 GMT will determine the stance of the movement’s senators on that committee.
European Union relations with Russia will be on the agenda of a meeting of foreign ministers in Brussels today.
They will discuss levying more sanctions on Russia over a stand-off with Ukraine over the capture by the Russian navy of 24 Ukrainian sailors in the Kerch Strait linking the Black and Azov seas. The EU is set put a further eight Russians on its travel ban and asset-freeze list and studying more support for Ukraine.
With the U.S. out for Presidents’ day and no notable data, it could shape up to be a relatively quiet session.
Markets have taken heart from signs that Sino-U.S. trade talks are proceeding well.
That’s pushed world stocks to 2 1/2-month high this morning as China Central Television reported consensus in principle on key topics while a White House statement said the discussions “led to progress between the two parties”.
Asian shares rose 0.9 percent, the Nikkei climbed to its highest for the year and Chinese mainland shares jumped 2 percent.
The Dow and Nasdaq closed Friday with their eighth consecutive weekly gains.
But it’s not all cheer. First of all, U.S. President Donald Trump has declared an emergency to get funding for his Wall.
That’s still subject to legal challenges.
Also, the trade war may just be moving to a new front — the US Commerce Department has sent its report on whether European auto imports threaten U.S. national security to Trump, who may disclose the contents once the China talks are past.
Data from Asia this morning reinforces that the world economy is slowing — weak Singapore exports data and a drop in foreign orders for Japanese machinery goods.
Markets are banking on central bank stimulus.
That’s comes after Friday’s comment from Benoit Couere about TLTROs.
The San Francisco Fed’s Mary Daly (non-voting member) also said on Friday she thought “the case for a rate increase isn’t there”.
The dollar has slipped as risk appetite improved and also due to Daly’s comments, affording some relief to other currencies.
The exception is the Turkish lira, which has fallen 0.6 percent after a the central bank cut reserve requirement, releasing an estimated $3 billion worth of liquidity.
The move has flagged the possibility of further easing in coming weeks.
Sterling is also up marginally as Theresa May sets off for Brussels yet again to try and re-negotiate.
In the words of Commerzbank: “what a sad Sisyphean task”.
With President’s Day in the U.S. taking Wall Street out of the picture, trading in Europe is likely to be more muted on Monday, although the deluge of company results continued.
Fresh from touching their highest level in four months on Friday, European stocks were set to gain further ground as investors bet more progress would be made in U.S.-China trade talks.
Futures for the main benchmarks were up 0.1 to 0.2 percent as company results also looked, on the whole, good.
UK-listed consumer goods firm Reckitt Benckiser was expected to rise 2 percent after reporting higher-than-expected fourth-quarter sales growth, helped by improvements in both its health and home and hygiene businesses.
Results from French car parts maker Faurecia are expected to boost the stock by around 2 percent, after the company said it hoped to outperform the market this year, though it warned of negative auto production growth.
German carmakers Daimler, Porsche, and BMW were expected to fall 2 percent after data from China showed car sales fell for a seventh straight month in January.
Investors in the auto sector are on tenterhooks after the U.S. Commerce Department sent its report on national security and car imports to Trump, setting the stage for possible tariffs.
Dealmaking continued apace with valve maker Spirax-Sarco saying it's in talks to buy France's Thermocoax and bottling company Coca-Cola HBC buying Serbian confectionary business Bambi.
British education company Pearson also said it agreed to sell its U.S. K-12 courseware business for $250 million as it shifts focus from textbooks to digital.
Shares in UK defence firm BAE Systems could be hurt by a Financial Times report that Germany’s arms ban to Riyadh would prevent it supplying some parts for Saudi Eurofighter planes.
The stock was indicated down 1 to 2 percent by traders. Wirecard shares were climbing 4 to 5 percent in pre-market after German market regulator BaFin banned the establishment or increase of short positions in the shares.
Emerging-markets equity index jumped 0.8 after gains in Asia where China’s blue-chip CSI 300 ends the day up 3.2 percent, its highest close since August 2018. Hong Kong added 1.7 percent.
Stocks in Johannesburg were up 0.4 percent and Russia’s dollar index adds 0.6 percent.
Some currencies also gained against the dollar which is losing ground for a third straight session.
China’s yuan strengthened in both on and offshore trading.
South Africa’s rand and Russia’s rouble added 0.2 percent, the latter helped by oil prices reaching three-month highs.
The Thai baht also nudged higher after data confirmed the economy expanded at its fastest pace in six years in 2018.
Turkey’s lira was the outlier, slipping 0.4 percent after the central bank announced it would lower the level of lira reserves banks are required to hold against deposits while data out showed house prices tumbling 25 percent in January, signalling a further economic slowdown.
Hungary gets a credit rating upgrade from S&P to BBB – now two notches in investment grade.
Russia’s Gazprom bank said it has decided to freeze accounts of Venezuelan state-oil company PDVSA in signs of further pressure mounting on President Nicolas Maduro from its ally.
A look at the day ahead from European Economics and Politics Editor Mark John and EMEA deputy markets editor Sujata Rao. The views expressed are their own.
Editing by Larry King