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European Shares Seen Higher Despite US-China Tensions

stockmarkets dec12 27may20 lt

European stocks look set to open higher on Wednesday as investors weigh hopes of economic recovery against rising U.S.-China tensions.

U.S. President Donald Trump said late on Tuesday the country was working on a strong response to China's planned national security legislation for Hong Kong, without giving further details. He indicated that details would be released before the end of the week.

In Hong Kong, hundreds of riot police ringed the city's legislature to stifle any protests ahead of a debate over a bill that would criminalize disrespect of China's national anthem.

Beijing has reportedly expanded the scope of the draft national security legislation to include banning not just behavior or acts that endanger national security, but also activities.

Elsewhere, the Bloomberg reported that Japan is compiling a new stimulus package of 117.1 trillion yen ($1 trillion), including 31.9 trillion yen of spending.

Asian markets traded mostly higher and the dollar gained ground, while gold held near a two-week low. Oil prices were flat to slightly lower on demand worries.

In economic releases, consumer and business sentiment survey results from France are due later in the session, headlining a light day for the European economic news.

U.S. stocks rallied overnight as all 50 states partially eased lockdown restrictions and JPMorgan CEO Jamie Dimon made some optimistic comments about the economic recovery and the health of his bank.

The Dow Jones Industrial Average climbed 2.2 percent and the S&P 500 gained 1.2 percent, while the tech-heavy Nasdaq Composite edged up 0.2 percent.

European markets closed higher on Tuesday as green shoots of economic recovery emerged and investors tracked positive developments in the race for a Covid-19 vaccine.

The pan European Stoxx 600 advanced 1.1 percent. The German DAX rose 1 percent, France's CAC 40 index surged 1.5 percent and the U.K.'s FTSE 100 added 1.2 percent.

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