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GLOBAL MARKETS-Sterling and metals shine brightest as risk appetite returns

From Reuters - April 17, 2018

LONDON (Reuters) - A gradual return of risk appetite lifted world shares on Tuesday, while there were milestones aplenty as sterling hit a post-Brexit high and U.S. sanctions on Russia drove aluminum prices to a 7-year peak.

Chinese data that provided a bit of something for everyone kept Asia largely in check overnight, but Europe started well with only Londons FTSE lagging as the pounds power weighed on its big exporters. [.EU]

There were more signs of China opening up its economy too and a steadier Russian rouble showed investors were also gradually shifting attention away from Syria tensions back to corporate earnings and possible interest rate moves.

The pounds rise was its eighth in a row, coming as bets firm on another Bank of England rate hike next month, while yields on U.S. Treasuries were at their highest in over three weeks ahead of a flurry of top Fed speakers.

It looks like China may be willing to cooperate with the U.S. so that might be spurring risk appetite and the positive mood in markets, said Rabobank analyst Bas Van Geffen.

There were still some trade war noises being made though.

Stocks in Shanghai closed near a one-year low, a U.S. move to ban American companies from selling components to Chinese telecom equipment maker ZTE Corp hit tech stocks.

Beijing then said it would slap a hefty temporary tariff on U.S. sorghum imports after finding they had damaged the domestic industry. That set grain futures prices jumping.

Economic data showed the Chinese economy grew 6.8 percent in the first three months of the year, unchanged from the previous quarter.

March retail sales jumped over 10 percent too, the strongest pace in four months, though other figures saw industrial output miss expectations and first-quarter fixed-asset investment growth also slowed.

Underneath the stable GDP growth is quite rapid rebalancing from industrial, investment and old economy sectors to consumption, services and new economy sectors like tech. This is encouraging, said Robert Subbaraman, chief economist for Asia excluding Japan at Nomura in Singapore.

STERLING AND EARNINGS

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