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European Shares Set To Open Tad Higher On Brexit Deal Optimism

stockmarkets dec21 15oct19 lt

European stocks look set to open higher on Tuesday as investors remain hopeful that Britain still has a chance to avoid a messy exit from the European Union at key negotiations this week.

The upside, however, may remain capped by a perceived lack of progress coming out of U.S.-China trade negotiations.

Prime Minister Boris Johnson wants to seal a Brexit deal at a make-or-break EU summit on Thursday and Friday, but the main sticking point remains the border between EU member Ireland and Northern Ireland.

Asian markets remain broadly higher as investors shifted their focus toward the U.S. third-quarter earnings season, which begins in earnest on Tuesday.

Citigroup, Goldman Sachs, Johnson & Johnson, and JPMorgan Chase are among the companies due to report their quarterly results before the start of trading later today.

The U.S. dollar hovered below 2-1/2-month highs against the yen and gold held steady below the $1,500 per ounce level while oil extended steep overnight losses after the release of weak Chinese data.

In economic releases, China inflation accelerated to the highest since 2013 on food prices, while factory gate prices eased further in September as trade disputes with the U.S. and subdued demand weighed on the manufacturing sector, separate reports showed today.

Labor market statistics from the U.K. and economic confidence survey results from Germany are due later in the session, headlining a busy day for the European economic news.

Overnight, U.S. stocks struggled for direction before ending marginally lower after China indicated further talks were needed to finalize the first phase of the trade deal and U.S. Treasury Secretary Steven Mnuchin warned the next round of tariffs on $156bn of Chinese goods will go into effect on Dec. 15 if a deal hasn't been reached by then.

A three-day rally in European shares halted on Monday as inconclusive U.S.-China trade negotiations and renewed Brexit uncertainty dented sentiment.

The pan European Stoxx 600 gave up half a percent. The German DAX slid 0.2 percent, France's CAC 40 index dropped 0.4 percent and the U.K.'s FTSE 100 shed half a percent.

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