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European Shares Seen Tad Lower

stockmarkets jan11 12aug20 lt

European stocks may open a tad lower on Wednesday after strong gains the previous day. Underlying sentiment may remain cautious as virus worries persist, a political impasse in the U.S. over further economic relief continued and China stepped up military drills around East Asia.

Asian markets fell on growing uncertainty over whether U.S. lawmakers would agree on an additional round of big fiscal stimulus. Investors are also weighing the impact of the approaching U.S. election after Democratic presidential candidate Joe Biden selected Senator Kamala Harris as his choice for vice president.

Oil held a loss but hovered near a five-month high, while the gold selloff entered a second day as the dollar rose amid a jump in U.S. bond yields. The global tally of coronavirus infections currently stands at over 20 million.

Quarterly national accounts from the U.K. and industrial production data from euro area are due later in the session, headlining a light day for the European economic news.

Across the Atlantic, a report on consumer price inflation may attract some attention.

U.S. stocks ended lower overnight after Sen. Majority Leader Mitch McConnell said that the stimulus talks were at "a bit of a stalemate".

Investors also reacted to president Trump's announcement about the possibility of a capital-gains tax cut and Russia's claim that it has developed a coronavirus vaccine.

The Dow eased 0.4 percent and the S&P 500 shed 0.8 percent while the tech-heavy Nasdaq Composite index tumbled 1.7 percent.

European markets posted strong gains on Tuesday, with signs of a slowing spread of the coronavirus pandemic, hopes for U.S. stimulus and data showing a surge in car sales in China helping underpin investor sentiment.

The pan European Stoxx 600 gained 1.7 percent. The German DAX rallied 2 percent, France's CAC 40 index climbed 2.4 percent and the U.K.'s FTSE 100 jumped 1.7 percent.

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