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|15 April, 2019

GLOBAL MARKETS-Stocks advance ahead of earnings; bonds stable

Positive news on China-U.S. trade talks whet risk appetite

LONDON- European stocks rose moderately after progress in the U.S.-China trade talks buoyed sentiment and investors grew somewhat optimistic about the next batch of corporate earnings.

The Stoxx Europe 600 recovered from earlier losses and rose higher, with gains in banks offsetting declines in miners.

Investors are focused on the U.S. earnings season to gauge the strength of corporate America in the face of major challenges to growth.

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JPMorgan Chase & Co. posted strong first-quarter results last week, and Bank of America Corp. is due on Tuesday.

Equities in Asia approached a fresh six-month high, spurred on by markets in Japan and Korea, after the Bank of China released upbeat credit data.

U.S. Treasury Secretary Steven Mnuchin said he hoped U.S.-China trade talks were approaching a final lap. 

That, combined with strong Chinese export and euro zone industrial production data on Friday, has lifted global equities, bund yields and the euro.

"It seems like bullish sentiment has decent grip for now and everyone is focused on the year to date performance of the equity markets," said Naeem Aslam, chief market analyst at TF Global Markets (UK) Ltd in London.

MSCI’s gauge of stocks across the globe gained 0.2 percent. The index is up nearly 15 percent for the year. 

Investors this week will be scrutinising data - including Germany’s ZEW survey and Chinese gross domestic product due on Wednesday - for signs of whether a global economic slowdown is turning around.

The optimism over progress in U.S.-China trade negotiations pushed investors away from safe haven assets such as the Swiss franc and toward riskier currencies.

The yen dropped towards its 2019 low on Monday and the Swiss franc hit its weakest in nearly a month.

The dollar also weakened slightly, allowing the euro to cement gains above $1.13.

Further spurring risk appetite, Reuters exclusively reported on Monday that U.S. negotiators have tempered demands that China curbs industrial subsidies as a 

Equities and other risky assets have been volatile this year over worries of a slowdown in the United States and other major economies.

The European Central Bank maintained its loose policy stance on Wednesday, highlighting threats to global growth.

"The market is bearish Europe. Not enough growth, not enough inflation, too much fiscal inaction and too much ECB dithering for some people' taste," said Societe Generale analyst Kit Juckes.

In commodities, oil provided big milestones last week, with Brent breaking through the $70 threshold and the U.S. benchmark posting six straight weeks of gains for the first time since early 2016.

Brent crude oil futures was last off 23 cents at $70.98 while crude futures  , the U.S. benchmark, eased 33 cents to $63.34.

(Editing by Alison Williams and Ed Osmond) ((tom.finn@tr.com; +44 2075427508 ; Reuters Messaging: tom.finn.reuters.com@reuters.net))

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