LONDON (Reuters) - U.S. Secretary of State Rex Tillerson is in Russia to tell Moscow it must give up support for Syrian President Bashar al-Assad in the wake of a poison gas attack that killed 87 people in northern Syria last week.
Delivering a message on behalf of Donald Trump, Tillerson has the support of the G7 industrialised nations and their Middle East allies. Russian President Vladimir Putin shows no sign of ditching his Syrian ally.
Russia said it hoped its meetings with Tillerson would be productive but was concerned about a number of areas of U.S. policy, including on Libya, Yemen and North Korea - a U.S. Navy strike group is steaming towards the western Pacific amid concerns the reclusive state may conduct a sixth nuclear test.
Moscow won’t be the only one looking for pointers to Trump’s foreign policy direction.
He came to power in January calling for warmer ties with Russia but responded to the gas attack by firing cruise missiles at a Syrian air base, putting his administration in open dispute with Moscow. Syria denies its military carried out the attack.
Tillerson has asked his European counterparts why American voters should care about the conflict in Ukraine, racked by a separatist conflict for the last three years, French Foreign Minister Jean-Marc Ayrault said.
The West imposed sanctions on Russia in 2014 over its annexation of Ukraine’s Crimea peninsula and its support for rebels in eastern Ukraine.
The nerves are jangling in Kiev, which said it had won reassurances from Tillerson that Washington would not allow any deal that links the fates of Ukraine and Syria.
Police are trying to find a motive after soccer team Borussia Dortmund’s bus was attacked with explosives on Tuesday shortly before the start of their Champions League game with AS Monaco, injuring defender Marc Barta and forcing the match to be postponed by a day.
In Hungary, nationalist Prime Minister Viktor Orban has caused loud protests from his European and U.S. allies with a law targeting an international university in Budapest founded by financier George Soros and viewed as a bastion of independent thinking in eastern Europe.
This is precisely what Orban wants. He faces a parliamentary election in 2018 and opinion polls show he stands a good chance of being reelected for a third term. The European Commission said it would debate the subject on Wednesday, while Orban’s domestic opponents, who consider the law part of a wider crackdown on dissent, plan further demonstrations against him.
Investors are again seeking shelter in the traditional safe-haven assets of gold, high-grade government debt and the yen as scary geopolitical factors dominate markets. Gold and the yen both hit their highest in five months while yields on 30-year U.S. Treasury bonds fell to their lowest since mid-January.
Hit by the strong yen, Tokyo shares fell to a four-month low. That said, European shares are expected to open higher after other Asian bourses chalked up modest gains. Chinese shares fell after producer price inflation eased.
The latest reason to hide under the duvet, or at least buy gold, was a warning from North Korea of a nuclear attack on the United States in the event of any aggression – just as a U.S. Navy strike force heads towards the Korean peninsula. Chinese President Xi Jinping urged a peaceful resolution in a call with President Donald Trump. U.S. Treasury yields fell on Tuesday and are down further on Wednesday.
German 10-year government bond yields are marginally lower at just under 0.2 percent before an auction of the bonds.
The dollar is down 0.1 percent against a basket of major currencies. The yen is up 0.1 percent at 109.54 per dollar, the euro is up 0.1 percent at $1.0616 and sterling is slightly lower at $1.2484.
Traded volumes on many markets are light ahead of the Easter break and this can amplify moves. Among European shares, autos stocks could be a focus after German luxury carmaker Daimler issued a surprise release, saying first-quarter earnings jumped 87 percent, and autos parts maker Faurecia posted sales up 10 percent.
Ahead of first-quarter results season, earnings are expected to increase 7.1 percent year-on-year, according to Thomson Reuters I/B/E/S data. Seven of the ten sectors should see an improvement in earnings relative to Q1 2016, with the energy sector expected to see the highest earnings growth rate.
Germany’s Siemens and Canadian firm Bombardier are in ‘advanced’ talks to combine their rail operations, leaving France’s Alstom, which had been a runner-up in merger talks, out in the cold as rail industry consolidation develops. Siemens hit a fresh record high and Alstom slipped 2.8 percent on the news on Tuesday, and they could be ones to watch as more merger news comes through today.
Meanwhile Mexico’s antitrust commission conditioned its acceptance of the ChemChina-Syngenta merger, demanding Syngenta divest five products, after European Union and U.S. authorities gave the deal the go-ahead and Syngenta itself announced Mexico’s acquiescence on Monday.
Other potential movers: BHP Billiton reasserts strategy, says Elliott proposals flawed; Akzo Nobel reports Elliott, PPG for allegedly sharing 'sensitive' information; Tesco recovery gains momentum with profit jump; Barry Callebaut confirms guidance as growth picks up in Q2; Siemens, Bombardier in talks about rail JV –sources; WH Smith first-half profit up 3.75 percent on travel boost; Hunting reports positive Q1 EBITDA as U.S. shale activity rises; PageGroup quarterly profit hits record as markets outside UK grow.
Gold is up 0.1 percent at $1,274 an ounce, having risen as high as just short of $1,280, a five-month high. Copper is down 0.7 percent at $5,730 a tonne, with Korea tensions blamed for the fall. Oil prices his one-month high and on track for its longest winning streak since August. Brent up 10 cents a barrel at $56.33.
Editing by Andrew Heavens