* European stocks bounce off lows, US signals rise
* Dollar takes another hit and gives gold a boost
* Oil gives up some gains after production decline
*Graph: asset performance in 2020 http://tmsnrt.rs/2yaDPgn
*Graph: global exchange rates in 2020 http://tmsnrt.rs/2egbfVh
By Simon Jessop and Alun John
LONDON, Aug 18 (Reuters) – Blue-chip European stocks rebounded on Tuesday, helped by gains in COVID-19-hit sectors such as travel and leisure, while the dollar fell on fears that new US fiscal stimulus measures find themselves in a political impasse.
Despite large amounts of stimulus money flowing through the system, gains were cautious amid thin holiday trading, with markets mindful of the escalating geopolitical tussle between China and the United States.
The reversal from early lows in Europe’s blue-chip STOXX 50 index, up 0.5%, was reflected in U.S. stock futures, which rose 0.2%. That suggests Wall Street’s broadest stock gauge could be closing in on a new record high, a day after its sister index, the Nasdaq, hit its own milestone.
Europe’s initial weakness followed a mixed situation in Asia overnight, after another episode of escalating conflict between the United States and China.
Facing concerns over close ties between Beijing and Huawei Technologies Co, U.S. President Donald Trump announced new restrictions on the maker of mobile phones and other technology. It seeks to limit the tech giant’s access to commercially available chips, a move likely to disrupt global supply chains.
However, the initial sea of red for European stocks quickly turned green, with German, Italian and Spanish stocks gaining 0.6% to 0.9%, driven by sectors such as autos and the travel and entertainment sector. hobbies.
Britain’s blue-chip FTSE 100 index, the region’s largest share market, was also higher in late morning, up 0.4 percent, but held back slightly by mining company BHP Group, which missed profits and warned of a slowdown in global growth.
One of those supporting further gains for equity markets was Mark Hafaele, chief investment officer at UBS Global Wealth Management.
“We emphasize a positive outlook for risk assets, but advise investors that they may need to adjust their strategies to optimize their portfolio for the next phase of recovery,” he said in a note to customers.
“Adding risk exposure as markets are at or near all-time highs can be daunting, but studies continue to show that time in the market is far more important than market timing.”
Investors had to balance actions against Huawei with Trump’s comments that China was meeting its obligations under the trade deal, pushing the Chinese currency to a more than five-month high against the greenback.
In other currency markets, the dominant theme was growing dollar weakness, which weighed on European government bond yields and pushed up prices of alternative safe-haven assets such as gold.
The latest blow to the struggling dollar came from disappointing data on the manufacturing and mortgage sector, which led the greenback to hit a new 5-1/2 year low against the Swiss franc. It also moved closer to its two-year low against a basket of its rivals, reached earlier this month. On the bond side, 10-year U.S. Treasuries were last down about 1 basis point at 0.6752. In Europe, German government bond yields held steady at three-day lows, ahead of Friday’s flash PMI activity surveys.
In the commodities sector, oil prices fell slightly, giving back some of their recent gains after OPEC+ said the producer group was almost fully compliant with production cuts.
Brent crude was down 15 cents, or 0.3%, at $45.22 a barrel, after gaining 1.3% on Monday. US crude is down 0.5%, at $42.68 a barrel, after rising 2.1% in the previous session.
Safe-haven gold closed higher after Berkshire Hathaway also disclosed a stake in Toronto-based Barrick Gold Corp, one of the world’s largest mining companies.
Spot gold added 1.1% to once again breach the $2,000 per ounce barrier, trading at $2,007 per ounce.
(Edited by David Evans and Catherine Evans)
