Shares across Asia plunged Thursday, with technology firms in Hong Kong and Shanghai battered after the arrest of a top executive at Chinese telecoms giant Huawei that has also fuelled fears about the recent China-US trade deal.

As Donald Trump and Xi Jinping's tariffs ceasefire last weekend -- which sparked a one-day rally -- fades to a distant memory, investors are back in selling mood as they fret over a range of issues including the state of the world economy, oil prices and Brexit.

The chances of trade peace between the US and China took a blow Thursday as it emerged <a href="http://www.wionews.com/world/huawei-cfo-arrested-in-canada-faces-extradition-to-us-181757">Huawei chief financial officer Meng Wanzhou </a>had been held in Canada and faces extradition to the United States over alleged Iran sanctions breaches by the firm.

Meng is also the daughter of company founder Ren Zhengfei, a former Chinese People's Liberation Army engineer.

The company had been investigated by US intelligence, who deemed it a national security threat.

However, the arrest drew a swift response from China, which said it "firmly opposes and strongly protests" the move, adding it had urged Canada and the US to "immediately correct the wrongdoing".

The news sent shudders through Hong Kong and Shanghai markets, where tech firms were hammered.

Hong Kong-listed ZTE, which was subject to a US banning order earlier his year over security fears before that was reduced to a massive fine, was almost five per cent down. Market heavyweight Tencent was two per cent lower and AAC Technologies was five per cent off.

And in Shanghai, Wingtech Technology was four per cent down, Raisecome Technology sank 2.8 per cent and Fujian Raynen Technology lost 2.6 per cent.

Taipei-listed tech firms were also hurt. Taiwan Semiconductor Manufacturing Company lost 2.2 per cent and Hong Hai Precision was 2.7 per cent lower.

'Significant'

There were also losses for other tech firms in the region, with Sony down three per cent in Tokyo and Samsung almost two per cent lower. The sector was already under pressure from concerns about future growth and following a surge in recent years.

"This headline is quite significant as the US government is attempting to persuade allies to stop using Huawei equipment due to security fears," said Stephen Innes, head of Asia-Pacific trade at OANDA.

"Recall that over 100 Chinese companies traded limit down (last month) when news broke the US urged allies to blacklist Huawei?"

On broader markets Hong Kong was down more than two per cent while Shanghai lost more than one per cent and Tokyo shed 1.8 per cent by the break. Taipei was two per cent off, while Manila and Jakarta also took a hit.

Sydney fell 0.5 per cent, Singapore gave up 1.2 per cent and Seoul was one per cent lower.

"This is what you call playing hardball," said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong.

"China is already asking for her release, as can be expected, but if the charges are serious, don't expect the US to blink."

Oil prices extended losses ahead of the weekend's meeting of OPEC and non-OPEC production giants, with investors unsure about how much and for how long they plan to reduce output.

The commodity has come under selling pressure, having soared Monday and Tuesday, owing to uncertainty about the reduction plans while Trump has called on OPEC to lift output to keep prices low.

Key figures around 0230 GMT

Tokyo - Nikkei 225: DOWN 1.8 per cent at 21,514.98 (break)

Hong Kong - Hang Seng: DOWN 2.3 per cent at 26,193.09

Shanghai - Composite: DOWN 1.1 per cent at 2,620.84

Euro/dollar: UP at $1.1346 from $1.1312 at 1700 GMT

Dollar/yen: UP at 112.84 yen from 113.47

Pound/dollar: DOWN at $1.2725 from $1.2745

Oil - West Texas Intermediate: DOWN 26 cents at $52.63 per barrel

Oil - Brent Crude: DOWN 19 cents at $61.37 per barrel

New York - Dow Jones: CLOSED for day of mourning

London - FTSE 100: DOWN 1.4 percent at 6,921.84 (close)&nbsp;

Shares across Asia plunged Thursday, with technology firms in Hong Kong and Shanghai battered after the arrest of a top executive at Chinese telecoms giant Huawei that has also fuelled fears about the recent China-US trade deal.

Shares across Asia plunged Thursday, with technology firms in Hong Kong and Shanghai battered after the arrest of a top executive at Chinese telecoms giant Huawei that has also fuelled fears about the recent China-US trade deal. As Donald Trump and Xi Jinping's tariffs ceasefire last weekend -- which sparked a one-day rally -- fades to a distant memory, investors are back in selling mood as they fret over a range of issues including the state of the world economy, oil prices and Brexit. The chances of trade peace between the US and China took a blow Thursday as it emerged Huawei chief financial officer Meng Wanzhou had been held in Canada and faces extradition to the United States over alleged Iran sanctions breaches by the firm. Meng is also the daughter of company founder Ren Zhengfei, a former Chinese People's Liberation Army engineer. The company had been investigated by US intelligence, who deemed it a national security threat. However, the arrest drew a swift response from China, which said it "firmly opposes and strongly protests" the move, adding it had urged Canada and the US to "immediately correct the wrongdoing". The news sent shudders through Hong Kong and Shanghai markets, where tech firms were hammered. Hong Kong-listed ZTE, which was subject to a US banning order earlier his year over security fears before that was reduced to a massive fine, was almost five per cent down. Market heavyweight Tencent was two per cent lower and AAC Technologies was five per cent off. And in Shanghai, Wingtech Technology was four per cent down, Raisecome Technology sank 2.8 per cent and Fujian Raynen Technology lost 2.6 per cent. Taipei-listed tech firms were also hurt. Taiwan Semiconductor Manufacturing Company lost 2.2 per cent and Hong Hai Precision was 2.7 per cent lower. 'Significant' There were also losses for other tech firms in the region, with Sony down three per cent in Tokyo and Samsung almost two per cent lower. The sector was already under pressure from concerns about future growth and following a surge in recent years. "This headline is quite significant as the US government is attempting to persuade allies to stop using Huawei equipment due to security fears," said Stephen Innes, head of Asia-Pacific trade at OANDA. "Recall that over 100 Chinese companies traded limit down (last month) when news broke the US urged allies to blacklist Huawei?" On broader markets Hong Kong was down more than two per cent while Shanghai lost more than one per cent and Tokyo shed 1.8 per cent by the break. Taipei was two per cent off, while Manila and Jakarta also took a hit. Sydney fell 0.5 per cent, Singapore gave up 1.2 per cent and Seoul was one per cent lower. "This is what you call playing hardball," said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. "China is already asking for her release, as can be expected, but if the charges are serious, don't expect the US to blink." Oil prices extended losses ahead of the weekend's meeting of OPEC and non-OPEC production giants, with investors unsure about how much and for how long they plan to reduce output. The commodity has come under selling pressure, having soared Monday and Tuesday, owing to uncertainty about the reduction plans while Trump has called on OPEC to lift output to keep prices low. Key figures around 0230 GMT Tokyo - Nikkei 225: DOWN 1.8 per cent at 21,514.98 (break) Hong Kong - Hang Seng: DOWN 2.3 per cent at 26,193.09 Shanghai - Composite: DOWN 1.1 per cent at 2,620.84 Euro/dollar: UP at $1.1346 from $1.1312 at 1700 GMT Dollar/yen: UP at 112.84 yen from 113.47 Pound/dollar: DOWN at $1.2725 from $1.2745 Oil - West Texas Intermediate: DOWN 26 cents at $52.63 per barrel Oil - Brent Crude: DOWN 19 cents at $61.37 per barrel New York - Dow Jones: CLOSED for day of mourning London - FTSE 100: DOWN 1.4 percent at 6,921.84 (close)

Asian markets tumble, China tech hit after Huawei arrest

Asian shares seesawed in cautious trading on Thursday with China extending losses as investors fretted about slowing global growth in the face of rising US&nbsp;interest rates and trade tensions.

US&nbsp;stock futures also briefly pulled down after a bounce in Wall Street overnight, underscoring fragile investor sentiment following a rout in October and steep sell-offs in recent sessions.

MSCI's broadest index of Asia-Pacific shares outside Japan momentarily turned lower after earlier rising about 0.2 per cent. It was last up 0.1 per cent. The index has so far managed to hold up in November after three straight monthly declines, but is on track for its worst annual performance since 2011.

Japan's Nikkei was also off morning highs to be up 0.4 per cent. Chinese shares were in the red after opening higher, with the blue-chip index falling 0.8 per cent. Hong Kong's Hang Seng index slipped 0.1 per cent.

"This was a half-hearted rally to start with," said Shane Oliver, Sydney-based head of investment strategy at AMP.

"Investors are still wary about whether they'll see further lows given none of the issues that drove the recent correction have dissipated."

The bitter Sino-US&nbsp;trade war remains the biggest concern for markets, with signs of weakening corporate profits, steep sell-off in tech stocks and rising US&nbsp;interest rates encouraging investors to take money off the table before year-end.

"And that's all tying in to worries about the global economy," Oliver added.

Singapore warned earlier on Thursday that trade frictions will likely hurt economic growth in the city state, widely seen as a bellwether for international trade and investment.

E-Minis for the S&amp;P 500 were mostly flat during Asian trading while FTSE futures were down 0.1 per cent.

Overnight in Wall Street, the benchmark S&amp;P 500 stock index ended higher but near session lows while the Dow gave up its gains to end flat ahead of the US&nbsp;Thanksgiving holiday in a sign of lingering bearishness.&nbsp;

Investors are looking to a meeting between US&nbsp;President Donald Trump and his Chinese counterpart Xi Jinping late this month for any signs of a de-escalation in the trade war between the economic superpowers.

Trump and Xi plan to meet on the sidelines of a G20 summit, which is being held in Argentina at the end of November and early December.

The United States and China have slapped import duties on each others' goods in a tit-for-tat tariff war that investors worry could put the brakes on global trade and growth.

Markets will also pay close attention to manufacturing activity reports from Japan, Europe and the United States due over the coming week or so.

"PMIs have held up reasonably well so far but if they trend lower it could add to the nervousness," AMP's Oliver said.

The synchronised global expansion that began roughly two years ago has now plateaued, and fresh signs are emerging of a weakening outlook. Global trade volumes are still increasing although at a slower pace.

Moreover, leading economic indicators monitored by the OECD have weakened since the start of the year and point to slower expansion ahead for the United Kingdom and the euro area.

All-weather currency

The Federal Reserve has stayed on its tightening path after ending seven years of near-zero interest rates in December 2015 that took the Fed funds rate to the current 2.00 to 2.25 percent. Investors expect the Fed to go again in December.

In response to the tightening, the US&nbsp;dollar has outperformed most of its peers this year with its index against a basket of major currencies up almost 5 percent. In comparison the Japanese yen is flat so far in 2018.

Marios Hadjikyriacos, analyst at broking firm XM.Com, said the greenback is currently an "all weather currency."

"It can shine both in risk-off sessions given its status as the world's reserve asset, and on risk-on days as wide yield differentials brighten its carry appeal," he said.

The dollar index was last off slightly at 96.64 while the yen inched higher to 112.99 following two straight sessions of losses.

Elsewhere, the euro rose on hopes that the Italian budget dispute would be resolved even as the European Commission took its first step toward disciplining Italy over its deficit. It was last at $1.1396.

Oil reversed early gains although prices were still well above one-year lows touched earlier this week.

US&nbsp;crude futures were last down 16 cents at $54.47 a barrel after hitting a one-year low of $52.77 on Tuesday. Brent eased 18 cents to $63.30 from the last close and well off Tuesday's trough of $61.71.

Gold was firmer, with spot prices at $1,226.5 an ounce.

Asian shares seesawed in cautious trading on Thursday with China extending losses as investors fretted about slowing global growth in the face of rising US interest rates and trade tensions.

Asian shares seesawed in cautious trading on Thursday with China extending losses as investors fretted about slowing global growth in the face of rising US interest rates and trade tensions. US stock futures also briefly pulled down after a bounce in Wall Street overnight, underscoring fragile investor sentiment following a rout in October and steep sell-offs in recent sessions. MSCI's broadest index of Asia-Pacific shares outside Japan momentarily turned lower after earlier rising about 0.2 per cent. It was last up 0.1 per cent. The index has so far managed to hold up in November after three straight monthly declines, but is on track for its worst annual performance since 2011. Japan's Nikkei was also off morning highs to be up 0.4 per cent. Chinese shares were in the red after opening higher, with the blue-chip index falling 0.8 per cent. Hong Kong's Hang Seng index slipped 0.1 per cent. "This was a half-hearted rally to start with," said Shane Oliver, Sydney-based head of investment strategy at AMP. "Investors are still wary about whether they'll see further lows given none of the issues that drove the recent correction have dissipated." The bitter Sino-US trade war remains the biggest concern for markets, with signs of weakening corporate profits, steep sell-off in tech stocks and rising US interest rates encouraging investors to take money off the table before year-end. "And that's all tying in to worries about the global economy," Oliver added. Singapore warned earlier on Thursday that trade frictions will likely hurt economic growth in the city state, widely seen as a bellwether for international trade and investment. E-Minis for the S&P 500 were mostly flat during Asian trading while FTSE futures were down 0.1 per cent. Overnight in Wall Street, the benchmark S&P 500 stock index ended higher but near session lows while the Dow gave up its gains to end flat ahead of the US Thanksgiving holiday in a sign of lingering bearishness. Investors are looking to a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping late this month for any signs of a de-escalation in the trade war between the economic superpowers. Trump and Xi plan to meet on the sidelines of a G20 summit, which is being held in Argentina at the end of November and early December. The United States and China have slapped import duties on each others' goods in a tit-for-tat tariff war that investors worry could put the brakes on global trade and growth. Markets will also pay close attention to manufacturing activity reports from Japan, Europe and the United States due over the coming week or so. "PMIs have held up reasonably well so far but if they trend lower it could add to the nervousness," AMP's Oliver said. The synchronised global expansion that began roughly two years ago has now plateaued, and fresh signs are emerging of a weakening outlook. Global trade volumes are still increasing although at a slower pace. Moreover, leading economic indicators monitored by the OECD have weakened since the start of the year and point to slower expansion ahead for the United Kingdom and the euro area. All-weather currency The Federal Reserve has stayed on its tightening path after ending seven years of near-zero interest rates in December 2015 that took the Fed funds rate to the current 2.00 to 2.25 percent. Investors expect the Fed to go again in December. In response to the tightening, the US dollar has outperformed most of its peers this year with its index against a basket of major currencies up almost 5 percent. In comparison the Japanese yen is flat so far in 2018. Marios Hadjikyriacos, analyst at broking firm XM.Com, said the greenback is currently an "all weather currency." "It can shine both in risk-off sessions given its status as the world's reserve asset, and on risk-on days as wide yield differentials brighten its carry appeal," he said. The dollar index was last off slightly at 96.64 while the yen inched higher to 112.99 following two straight sessions of losses. Elsewhere, the euro rose on hopes that the Italian budget dispute would be resolved even as the European Commission took its first step toward disciplining Italy over its deficit. It was last at $1.1396. Oil reversed early gains although prices were still well above one-year lows touched earlier this week. US crude futures were last down 16 cents at $54.47 a barrel after hitting a one-year low of $52.77 on Tuesday. Brent eased 18 cents to $63.30 from the last close and well off Tuesday's trough of $61.71. Gold was firmer, with spot prices at $1,226.5 an ounce.

Global Markets: Asian shares fragile as growth worries sap confidence

World stocks slipped on Friday as expectations of trade tensions dominating this weekend's summit of G7 countries, along with renewed talk of monetary tightening by major central banks, weighed on risk sentiment.

The MSCI All-Country World index, which tracks shares in 47 countries, was down nearly half a per cent in morning trade in Europe - though it was still set to break a three-week streak of losses.

Fears of a trade war, expectations of more rate hikes in the United States, and a wind-down of a massive monetary stimulus in Europe fuelled a risk-off tone in markets, investors said.

The US&nbsp;Federal Reserve is widely expected to raise interest rates for a second time this year next week. The focus is on whether it will hint at raising rates four times in 2018.

European Central Bank policymakers meeting on June 14 will debate whether to end bond purchases later this year, the bank's chief economist said this week, in a hawkish message that sent the euro to a three-week top, hit emerging markets, and spurred demand for safe-haven bonds.

Before those meetings, however, markets will have to digest fallout from the G7 summit in Quebec, where the mounting risk of a tariff war between the United States and its major trade partners will be in the spotlight.

An unprecedented US-North Korea summit scheduled for June 12 in Singapore, with Washington seeking to pressure Pyongyang into abandoning its nuclear weapons programme, is giving investors another reason for caution.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 per cent after six straight sessions of gains took it to its highest since mid-March. It was on track for a weekly gain of more than 1 per cent.

Chinese shares slipped, with the blue-chip Shangai-Shenzhen index down 1.7 per cent and Hong Kong's Hang Seng.HSI declining 1.5 per cent.

Japan's Nikkei average and South Korea's KOSPI were off 0.6 per cent and 0.8 per cent, respectively, while Australian shares ended 0.1 per cent lower.

The pan-European STOXX 600 index was on track for its third weekly loss in a row, with renewed strength in the euro also weighing. It was down 0.7 per cent.

Italy's government bonds faced renewed selling pressure, as the risk aversion in world markets and unease about Rome's spending plans set yields on short-dated debt up for their biggest weekly rise since 2012.

"A few things are contributing to nervousness today -- the trade issues are back on, then there is the Italy situation and we are not sure how the ECB will respond to that," said Salman Ahmed, chief investment strategist at Lombard Odier Investment Management.

"And in emerging markets, there are some idiosyncratic risks (Turkey, Argentina and Brazil) which are becoming worrying." He remained "cautious" on adding risk, as "none of these issues seems to have a clear short-term resolution."

The dollar rebounded 0.3 per cent from near three-week lows against a basket of currencies, helped by the strong jobless claims numbers in the US&nbsp;on Thursday.

The dollar has come under pressure this week as the euro bounced back from 10-month lows thanks to an ebbing of political concerns over Italy as well as the possible ECB moves over its bond purchases.

The dollar fell against the safe-haven Japanese yen to 109.35 but remained well below a four-month top of 111.39 touched in May.

The euro inched down to $1.1763 after four straight session of gains took it to its highest level since mid-May.

In commodities, copper came off from a 4-1/2-year high touched on Wednesday.

Oil prices fell as surging US&nbsp;output and signs of weakening demand in China output outweighed support from supply woes in Venezuela and OPEC's production cuts.

U.S. crude fell 0.5 per cent to $65.64 a barrel, while Brent dropped 0.5 per cent to $76.95.

Spot gold slipped 0.1 per cent at $1,298.47 an ounce.

Fears of a trade war, expectations of more rate hikes in the United States, and a wind-down of a massive monetary stimulus in Europe fuelled a risk-off tone in markets, investors said

World stocks slipped on Friday as expectations of trade tensions dominating this weekend's summit of G7 countries, along with renewed talk of monetary tightening by major central banks, weighed on risk sentiment. The MSCI All-Country World index, which tracks shares in 47 countries, was down nearly half a per cent in morning trade in Europe - though it was still set to break a three-week streak of losses. Fears of a trade war, expectations of more rate hikes in the United States, and a wind-down of a massive monetary stimulus in Europe fuelled a risk-off tone in markets, investors said. The US Federal Reserve is widely expected to raise interest rates for a second time this year next week. The focus is on whether it will hint at raising rates four times in 2018. European Central Bank policymakers meeting on June 14 will debate whether to end bond purchases later this year, the bank's chief economist said this week, in a hawkish message that sent the euro to a three-week top, hit emerging markets, and spurred demand for safe-haven bonds. Before those meetings, however, markets will have to digest fallout from the G7 summit in Quebec, where the mounting risk of a tariff war between the United States and its major trade partners will be in the spotlight. An unprecedented US-North Korea summit scheduled for June 12 in Singapore, with Washington seeking to pressure Pyongyang into abandoning its nuclear weapons programme, is giving investors another reason for caution. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 per cent after six straight sessions of gains took it to its highest since mid-March. It was on track for a weekly gain of more than 1 per cent. Chinese shares slipped, with the blue-chip Shangai-Shenzhen index down 1.7 per cent and Hong Kong's Hang Seng.HSI declining 1.5 per cent. Japan's Nikkei average and South Korea's KOSPI were off 0.6 per cent and 0.8 per cent, respectively, while Australian shares ended 0.1 per cent lower. The pan-European STOXX 600 index was on track for its third weekly loss in a row, with renewed strength in the euro also weighing. It was down 0.7 per cent. Italy's government bonds faced renewed selling pressure, as the risk aversion in world markets and unease about Rome's spending plans set yields on short-dated debt up for their biggest weekly rise since 2012. "A few things are contributing to nervousness today -- the trade issues are back on, then there is the Italy situation and we are not sure how the ECB will respond to that," said Salman Ahmed, chief investment strategist at Lombard Odier Investment Management. "And in emerging markets, there are some idiosyncratic risks (Turkey, Argentina and Brazil) which are becoming worrying." He remained "cautious" on adding risk, as "none of these issues seems to have a clear short-term resolution." The dollar rebounded 0.3 per cent from near three-week lows against a basket of currencies, helped by the strong jobless claims numbers in the US on Thursday. The dollar has come under pressure this week as the euro bounced back from 10-month lows thanks to an ebbing of political concerns over Italy as well as the possible ECB moves over its bond purchases. The dollar fell against the safe-haven Japanese yen to 109.35 but remained well below a four-month top of 111.39 touched in May. The euro inched down to $1.1763 after four straight session of gains took it to its highest level since mid-May. In commodities, copper came off from a 4-1/2-year high touched on Wednesday. Oil prices fell as surging US output and signs of weakening demand in China output outweighed support from supply woes in Venezuela and OPEC's production cuts. U.S. crude fell 0.5 per cent to $65.64 a barrel, while Brent dropped 0.5 per cent to $76.95. Spot gold slipped 0.1 per cent at $1,298.47 an ounce.

Global Stocks: Stocks slip as central bank talk, trade, weigh on risk sentiment

Asian stocks extended a global sell-off&nbsp;on Wednesday&nbsp;as Italy's political crisis rippled across financial markets, toppling the euro to a 10-month low, pushing up borrowing costs for Rome and sending investors into safer assets such as US&nbsp;Treasuries.

MSCI's broadest index of&nbsp;Asia-Pacific shares outside Japan tumbled 1.4 per cent, while Japan's Nikkei average sold off 1.5 per cent to a six-week low.

Chinese shares also headed south, with the Shanghai Composite index down 1.4 per cent. South Korea's KOSPI and Australia's S&P/ASX 200 slipped 2.0 per cent and 0.5 per cent, respectively.

Financial spread-betters expected a mixed opening in Europe, with London's FTSE to open 5 points lower at 7,627, Frankfurt's DAX to open 5 points higher at 12,671 and Paris CAC to open down 3 points at 5,435.

The sharp downturn in&nbsp;Asia&nbsp;followed from an equally harsh session on Wall Street&nbsp;on Tuesday, where the Dow Jones Industrial Average fell 1.6 per cent, the S&P 500 lost 1.2 per cent and the Nasdaq Composite dropped 0.5 per cent. The financial sector took the hardest hit.

Investors fear that repeat elections in the euro zone's third-largest economy - which could come as soon as July - may become a de-facto referendum on Italian membership of the currency bloc and its role in the European Union.

"The way Italy's short-term debt yields are spiking makes you think default risk is on the radar in the market. It tells how grave the situation is," said Makoto Noji, senior strategist at SMBC Nikko Securities.

"What the markets are starting to factor-in is not a default per se but an early election leading to a victory of eurosceptics and an exit from the euro."

Short-dated Italian bond yields - a sensitive gauge of political risk - soared 1.5 percentage points from&nbsp;Monday&nbsp;to their highest since 2013 in their biggest move in nearly 26 years.

Safe-haven US&nbsp;Treasury bonds and German bunds rallied, as did the Japanese yen, the US&nbsp;dollar and gold. The euro fell against the Swiss franc, Japanese yen and US&nbsp;dollar, nearing $1.15 and touching its lowest point since July.

US&nbsp;10-year Treasuries were yielding 2.817 per cent in the&nbsp;Asian afternoon, edging up from the U.S. close of 2.768 per cent, while S&P futures rose 0.2 per cent.

Earlier this week, there was talk that a new vote in Italy would not be held until late this year or early 2019, prolonging the uncertainty.

Kerry Craig, a global market analyst at JPMorgan Asset Management, noted that Italy's economy is in better shape that it was in 2011 when the eurozone was mired in a debt crisis.

But, he added, "Completely dismissing the risk that Italy poses would be an unwise move, especially given how the next election may play out and the prospect of a stronger eurosceptic position."

In&nbsp;Asia, traders also fretted over the on-again, off-again US-North Korean summit and the US-China trade relationship.

The United States said&nbsp;on Tuesday&nbsp;that it would continue pursuing actions on trade with China, prompting Chinese state media to slam the U.S. announcement.

Emerging market stocks lost 1.2 per cent, marking a new low point for the year, under continued pressure from a rising US&nbsp;dollar for countries that often borrow in that currency.

Indonesia's central bank is holding an out-of-cycle policy meeting&nbsp;on Wednesday and is expected to raise its benchmark interest rate for the second time&nbsp;in two weeks, according to a Reuters poll.

Oil struggled under pressure from expectations that Saudi Arabia and Russia would pump more oil to counter potential supply shortfalls from Venezuela and Iran, even as US&nbsp;output has surged in recent years.

US&nbsp;crude futures retreated 0.2 per cent to $66.58 per barrel, extending losses into a sixth consecutive sessions.

MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 1.4 per cent

Asian stocks extended a global sell-off on Wednesday as Italy's political crisis rippled across financial markets, toppling the euro to a 10-month low, pushing up borrowing costs for Rome and sending investors into safer assets such as US Treasuries. MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 1.4 per cent, while Japan's Nikkei average sold off 1.5 per cent to a six-week low. Chinese shares also headed south, with the Shanghai Composite index down 1.4 per cent. South Korea's KOSPI and Australia's S&P/ASX 200 slipped 2.0 per cent and 0.5 per cent, respectively. Financial spread-betters expected a mixed opening in Europe, with London's FTSE to open 5 points lower at 7,627, Frankfurt's DAX to open 5 points higher at 12,671 and Paris CAC to open down 3 points at 5,435. The sharp downturn in Asia followed from an equally harsh session on Wall Street on Tuesday, where the Dow Jones Industrial Average fell 1.6 per cent, the S&P 500 lost 1.2 per cent and the Nasdaq Composite dropped 0.5 per cent. The financial sector took the hardest hit. Investors fear that repeat elections in the euro zone's third-largest economy - which could come as soon as July - may become a de-facto referendum on Italian membership of the currency bloc and its role in the European Union. "The way Italy's short-term debt yields are spiking makes you think default risk is on the radar in the market. It tells how grave the situation is," said Makoto Noji, senior strategist at SMBC Nikko Securities. "What the markets are starting to factor-in is not a default per se but an early election leading to a victory of eurosceptics and an exit from the euro." Short-dated Italian bond yields - a sensitive gauge of political risk - soared 1.5 percentage points from Monday to their highest since 2013 in their biggest move in nearly 26 years. Safe-haven US Treasury bonds and German bunds rallied, as did the Japanese yen, the US dollar and gold. The euro fell against the Swiss franc, Japanese yen and US dollar, nearing $1.15 and touching its lowest point since July. US 10-year Treasuries were yielding 2.817 per cent in the Asian afternoon, edging up from the U.S. close of 2.768 per cent, while S&P futures rose 0.2 per cent. Earlier this week, there was talk that a new vote in Italy would not be held until late this year or early 2019, prolonging the uncertainty. Kerry Craig, a global market analyst at JPMorgan Asset Management, noted that Italy's economy is in better shape that it was in 2011 when the eurozone was mired in a debt crisis. But, he added, "Completely dismissing the risk that Italy poses would be an unwise move, especially given how the next election may play out and the prospect of a stronger eurosceptic position." In Asia, traders also fretted over the on-again, off-again US-North Korean summit and the US-China trade relationship. The United States said on Tuesday that it would continue pursuing actions on trade with China, prompting Chinese state media to slam the U.S. announcement. Emerging market stocks lost 1.2 per cent, marking a new low point for the year, under continued pressure from a rising US dollar for countries that often borrow in that currency. Indonesia's central bank is holding an out-of-cycle policy meeting on Wednesday and is expected to raise its benchmark interest rate for the second time in two weeks, according to a Reuters poll. Oil struggled under pressure from expectations that Saudi Arabia and Russia would pump more oil to counter potential supply shortfalls from Venezuela and Iran, even as US output has surged in recent years. US crude futures retreated 0.2 per cent to $66.58 per barrel, extending losses into a sixth consecutive sessions.

Global Markets: Stocks battered as Italian crisis deepens

Indian shares posted a record closing high on Thursday as a rally in global markets boosted sentiment, while banking stocks led gains on hopes that the government would raise the foreign investment ceiling in lenders.

The broader NSE Nifty closed up 0.26 per cent at 10,817.00, while the benchmark BSE Sensex ended 0.51 per cent higher at 35,260.29.

Banking stocks led gains on hopes that the government would raise the foreign investment ceiling in lenders

Indian shares posted a record closing high on Thursday as a rally in global markets boosted sentiment, while banking stocks led gains on hopes that the government would raise the foreign investment ceiling in lenders. The broader NSE Nifty closed up 0.26 per cent at 10,817.00, while the benchmark BSE Sensex ended 0.51 per cent higher at 35,260.29.

Sensex hits record closing high; lenders gain

Benchmark Sensex reversed a three-session slide to end at 33,970 today after the government moved forward on its bank recapitalisation programme.

Investors also took heart from upbeat macro indicators and firm global cues, brokers said.

The finance ministry today sought Parliament&#39;s nod for the extra expenditure of Rs 80,000 crore towards recapitalisation of bad loans-saddled public sector banks through bonds.

State-run lenders made handsome gains in today&#39;s session.

Index heavyweight SBI rose 1.72 per cent, while UCO Bank, IDBI, Punjab National Bank, Bank of India, Bank of Baroda and Oriental Bank of Commerce, among others, rallied by up to 8.50 per cent.

Market sentiment was bolstered after a monthly survey showed the Indian services sector returned to marginal growth in December as new orders broadly stabilised.

The BSE benchmark Sensex opened higher at 33,912.49 and hovered in a range of 33,995.40 to 33,802.13 before finishing at 33,969.64, showing a gain of 176.26 points or 0.52 per cent.

The gauge had lost 263.45 points in the previous three sessions.

The NSE 50-share Nifty also closed higher by 61.60 points, or 0.59 per cent, at 10,504.80 after shuttling between 10,513 and 10,441.45.

&quot;Positive global cues and improvement in services PMI data for December helped the market move out of the subdued phase of trading.

&quot;Global growth expectation and continued buying in metal stocks raised the market sentiment, while PSU banks outperformed on account of finalisation of recapitalisation,&quot; said Vinod Nair, Head of Research, Geojit Financial Services.

Meanwhile, foreign portfolio investors (FPIs) bought shares worth Rs 96.31 crore, while domestic institutional investors (DIIs) were net sellers to the tune of Rs 269.20 crore yesterday, provisional data showed.

Asian bourses displayed a firm trend, led by Japan which began the first trading of 2018 on a strong footing. European markets opened higher.

Back home, Tata Steel was the biggest gainer in the Sensex kitty, rising 3.74 per cent, followed by Dr Reddy&#39;s, which advanced 3.14 per cent.

Other gainers were L&amp;T, ONGC, Asian Paints, Sun Pharma, Coal India, SBI, IndusInd Bank, Bharti Airtel, TCS, Bajaj Auto, Reliance Industries, Yes Bank, Adani Ports, HDFC Ltd and HDFC Bank, rising by up to 3.08 per cent.

Among the sectoral indices, metal climbed 2.77 per cent, consumer durables 2.53 per cent, capital goods 2.11 per cent, PSU 1.55 per cent, infrastructure 1.03 per cent, healthcare 0.99 per cent, oil and gas 0.80 per cent, bankex 0.51 per cent and power 0.33 per cent.

The broader markets continued to outperform the benchmark. The BSE small-cap and mid-cap indices rose by 0.88 per cent and 0.71 per cent, respectively.

Globally, Asian stocks ended higher as soaring oil prices helped energy firms post bumper gains, following more records on Wall Street.

Japan&#39;s Nikkei rose 3.26 per cent, Hong Kong&#39;s Hang Seng gained 0.57 per cent and Shanghai Composite Index was up 0.49 per cent. In Europe, Frankfurt&#39;s DAX rose 0.94 per cent, while Paris gained 0.85 per cent. London FTSE was up 0.15 per cent.

Index heavyweight SBI rose 1.72 per cent, while UCO Bank, IDBI, Punjab National Bank, Bank of India, Bank of Baroda and Oriental Bank of Commerce, among others, rallied by up to 8.50 per cent.

Benchmark Sensex reversed a three-session slide to end at 33,970 today after the government moved forward on its bank recapitalisation programme. Investors also took heart from upbeat macro indicators and firm global cues, brokers said. The finance ministry today sought Parliament's nod for the extra expenditure of Rs 80,000 crore towards recapitalisation of bad loans-saddled public sector banks through bonds. State-run lenders made handsome gains in today's session. Index heavyweight SBI rose 1.72 per cent, while UCO Bank, IDBI, Punjab National Bank, Bank of India, Bank of Baroda and Oriental Bank of Commerce, among others, rallied by up to 8.50 per cent. Market sentiment was bolstered after a monthly survey showed the Indian services sector returned to marginal growth in December as new orders broadly stabilised. The BSE benchmark Sensex opened higher at 33,912.49 and hovered in a range of 33,995.40 to 33,802.13 before finishing at 33,969.64, showing a gain of 176.26 points or 0.52 per cent. The gauge had lost 263.45 points in the previous three sessions. The NSE 50-share Nifty also closed higher by 61.60 points, or 0.59 per cent, at 10,504.80 after shuttling between 10,513 and 10,441.45. "Positive global cues and improvement in services PMI data for December helped the market move out of the subdued phase of trading. "Global growth expectation and continued buying in metal stocks raised the market sentiment, while PSU banks outperformed on account of finalisation of recapitalisation," said Vinod Nair, Head of Research, Geojit Financial Services. Meanwhile, foreign portfolio investors (FPIs) bought shares worth Rs 96.31 crore, while domestic institutional investors (DIIs) were net sellers to the tune of Rs 269.20 crore yesterday, provisional data showed. Asian bourses displayed a firm trend, led by Japan which began the first trading of 2018 on a strong footing. European markets opened higher. Back home, Tata Steel was the biggest gainer in the Sensex kitty, rising 3.74 per cent, followed by Dr Reddy's, which advanced 3.14 per cent. Other gainers were L&T, ONGC, Asian Paints, Sun Pharma, Coal India, SBI, IndusInd Bank, Bharti Airtel, TCS, Bajaj Auto, Reliance Industries, Yes Bank, Adani Ports, HDFC Ltd and HDFC Bank, rising by up to 3.08 per cent. Among the sectoral indices, metal climbed 2.77 per cent, consumer durables 2.53 per cent, capital goods 2.11 per cent, PSU 1.55 per cent, infrastructure 1.03 per cent, healthcare 0.99 per cent, oil and gas 0.80 per cent, bankex 0.51 per cent and power 0.33 per cent. The broader markets continued to outperform the benchmark. The BSE small-cap and mid-cap indices rose by 0.88 per cent and 0.71 per cent, respectively. Globally, Asian stocks ended higher as soaring oil prices helped energy firms post bumper gains, following more records on Wall Street. Japan's Nikkei rose 3.26 per cent, Hong Kong's Hang Seng gained 0.57 per cent and Shanghai Composite Index was up 0.49 per cent. In Europe, Frankfurt's DAX rose 0.94 per cent, while Paris gained 0.85 per cent. London FTSE was up 0.15 per cent.

Sensex marks first gain of 2018, rebounds 176 points

At the annual fall meeting of the International Monetary Fund and the World Bank, Indian finance minister Arun Jaitley warned about the risks of low and negative interest rates and &quot;significant loan impairments&quot; in the banking system to the global financial stability.

In an effort to guard against these risks, Jaitley said policy frameworks will need to be strengthened. He advocated &quot;deleveraging&quot; balance sheets and accumulating buffers to spur growth.&nbsp;

&quot;Gains from product and labour market reforms and strengthening of risk management practices to address balance sheet vulnerabilities would be helpful in further enhancing resilience,&quot; he said.

The minister said prolonged accommodative monetary policies in advanced economies will have serious implications for the emerging market and developing economies (EMDEs), including spillovers.&nbsp;

Voicing concerns that normalisation of the US monetary policy could have adverse effects globally, he said the central banks in major advanced economies should be mindful of financial stability risks arising out of monetary policy normalisation.

&quot;However, risks to global financial stability persist because of low and negative interest rates, the&nbsp;overhang of private debt and significant loan impairments in the banking system,&quot; he said.

Jaitley said though the global financial stability appeared to have improved with easing financing conditions, he warned that the risks to global stability would have deeper implications for the IMF and the World Bank too. In all likelihood, the bodies could be pressed with larger demands on their resources.&nbsp;

Both the global financial institutions need to be adequately resourced, specifically to meet a wider canvas of development aspirations arising out of the Sustainable Development Goals, he said.&nbsp;

(WION with inputs from PTI) 
&nbsp;

Indian finance minister said accommodative monetary policies in advanced economies could adversely affect emerging market

At the annual fall meeting of the International Monetary Fund and the World Bank, Indian finance minister Arun Jaitley warned about the risks of low and negative interest rates and "significant loan impairments" in the banking system to the global financial stability. In an effort to guard against these risks, Jaitley said policy frameworks will need to be strengthened. He advocated "deleveraging" balance sheets and accumulating buffers to spur growth. "Gains from product and labour market reforms and strengthening of risk management practices to address balance sheet vulnerabilities would be helpful in further enhancing resilience," he said. The minister said prolonged accommodative monetary policies in advanced economies will have serious implications for the emerging market and developing economies (EMDEs), including spillovers. Voicing concerns that normalisation of the US monetary policy could have adverse effects globally, he said the central banks in major advanced economies should be mindful of financial stability risks arising out of monetary policy normalisation. "However, risks to global financial stability persist because of low and negative interest rates, the overhang of private debt and significant loan impairments in the banking system," he said. Jaitley said though the global financial stability appeared to have improved with easing financing conditions, he warned that the risks to global stability would have deeper implications for the IMF and the World Bank too. In all likelihood, the bodies could be pressed with larger demands on their resources. Both the global financial institutions need to be adequately resourced, specifically to meet a wider canvas of development aspirations arising out of the Sustainable Development Goals, he said. (WION with inputs from PTI)

India warns against risks of low, negative interest rates on global economy

China&#39;s policymakers and leading economists today voiced concerns about Britain&#39;s vote to leave the European Union, with the finance minister saying it has heightened market uncertainty, though some expect a limited impact on the Chinese economy. 
 
The &quot;Brexit&quot; decision &quot;will cast a shadow over the global economy ... The repercussions and fallout will emerge in the next five to 10 years,&quot; said Lou Jiwei, China&#39;s minister of finance, at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing. 
 
&quot;It&#39;s difficult to predict now,&quot; he said. &quot;The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view.&quot; 
 
Stock markets around the world plunged in the wake of the referendum. Sterling&#39;s value also plummeted. 
 
Lou&#39;s views were echoed by the head of China&#39;s top economic planning authority and other economists at the World Economic Forum (WEF) in the northern city of Tianjin. 
 
&quot;For Chinese firms that are going to invest or carry out mergers, entrepreneurs are smarter than me, and they will definitely wait and see,&quot; Xu Shaoshi, chairman of the National Development and Reform Commission, said at WEF today. 
 
&quot;The Brexit incident wil affect China&#39;s economy via investment, trade and capital,&quot; he said. &quot;But I believe the impact will not be big and relevant government departments have made contingency plans.&quot; 
 
Huang Yiping, a professor at Peking University and a member of the central bank&#39;s monetary policy committee, said it is hard to judge the direct impact of the British referendum on China&#39;s economy. 
 
&quot;If (Brexit) is an important landmark in terms of a reversal of globalisation, I think that&#39;s very bad for the world, it&#39;s very bad for China,&quot; Huang said. 
 
Li Daokui, a professor at Tsinghua University and a former adviser to China&#39;s central bank, was more optimistic on the referendum&#39;s effects on the world&#39;s second-largest economy. 
 
&quot;China is perhaps one of the least impacted economies in the world by the event of Brexit,&quot; he told an audience at WEF. 
 
&quot;The only short-term impact I can think about is the exchange rate of the Renminbi ... But I do think within a few trading sessions that situation will very quickly be subdued,&quot; Li said. 
 
Also speaking at WEF was economist Nouriel Roubini, famed for predicting the global financial crisis, who said the decision to leave the European Union &quot;creates a whole bunch of financial, economic, political and geopolitical uncertainties.&quot; 
 
It could be the &quot;beginning of the disintegration&quot; of the bloc of countries, the euro zone or the United Kingdom, said Roubini. 
 
&quot;I don&#39;t expect a global recession or another global financial crisis,&quot; he added. &quot;I think the impact of Brexit is significant but not of the same size and magnitude of the one we had 2007 to 2009.&quot; 
 
Michael Falcon, CEO of Global Investment Management Asia Pacific at JP Morgan, said he expects more market volatility but doubts the vote will derail a global recovery. 
 
&quot;It is a shock, not a crisis, and so far markets seem to be handling this pretty well,&quot; Falcon said at the WEF conference. 
 
(Reuters)

The repercussions and fallout will emerge in the next five to 10 years, said Lou Jiwei, China's finance minister

China's policymakers and leading economists today voiced concerns about Britain's vote to leave the European Union, with the finance minister saying it has heightened market uncertainty, though some expect a limited impact on the Chinese economy. The "Brexit" decision "will cast a shadow over the global economy ... The repercussions and fallout will emerge in the next five to 10 years," said Lou Jiwei, China's minister of finance, at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing. "It's difficult to predict now," he said. "The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view." Stock markets around the world plunged in the wake of the referendum. Sterling's value also plummeted. Lou's views were echoed by the head of China's top economic planning authority and other economists at the World Economic Forum (WEF) in the northern city of Tianjin. "For Chinese firms that are going to invest or carry out mergers, entrepreneurs are smarter than me, and they will definitely wait and see," Xu Shaoshi, chairman of the National Development and Reform Commission, said at WEF today. "The Brexit incident wil affect China's economy via investment, trade and capital," he said. "But I believe the impact will not be big and relevant government departments have made contingency plans." Huang Yiping, a professor at Peking University and a member of the central bank's monetary policy committee, said it is hard to judge the direct impact of the British referendum on China's economy. "If (Brexit) is an important landmark in terms of a reversal of globalisation, I think that's very bad for the world, it's very bad for China," Huang said. Li Daokui, a professor at Tsinghua University and a former adviser to China's central bank, was more optimistic on the referendum's effects on the world's second-largest economy. "China is perhaps one of the least impacted economies in the world by the event of Brexit," he told an audience at WEF. "The only short-term impact I can think about is the exchange rate of the Renminbi ... But I do think within a few trading sessions that situation will very quickly be subdued," Li said. Also speaking at WEF was economist Nouriel Roubini, famed for predicting the global financial crisis, who said the decision to leave the European Union "creates a whole bunch of financial, economic, political and geopolitical uncertainties." It could be the "beginning of the disintegration" of the bloc of countries, the euro zone or the United Kingdom, said Roubini. "I don't expect a global recession or another global financial crisis," he added. "I think the impact of Brexit is significant but not of the same size and magnitude of the one we had 2007 to 2009." Michael Falcon, CEO of Global Investment Management Asia Pacific at JP Morgan, said he expects more market volatility but doubts the vote will derail a global recovery. "It is a shock, not a crisis, and so far markets seem to be handling this pretty well," Falcon said at the WEF conference. (Reuters)

China's finance minister sees 'Brexit' heightening uncertainty for markets

Turmoil unleashed by Britain&#39;s vote to leave the EU engulfed the opposition Labour Party, while policymakers as far away as China, Japan and South Korea fretted today over the threat to global financial stability, hours before markets reopen. 
 
In the oldest parliamentary democracy, three million Britons have signed a petition calling for a re-run of Thursday&#39;s referendum that split the nation, and one opinion poll showed a strong majority of Scots now want to break with the United Kingdom rather than with the European Union. 
 
Labour&#39;s left-wing leader Jeremy Corbyn sacked his foreign policy chief as the party plunged into open conflict. 
 
His health chief responded by resigning, calling for a new leader and reflecting accusations among pro-EU lawmakers that Corbyn&#39;s failure to win over traditional Labour voters had played a major role in the referendum result. 
 
Sacked foreign affairs spokesman Hilary Benn also called for Corbyn, who was elected last year largely by Left-wing party members and supporters, to go. &quot;He is a good and decent man but he is not a leader,&quot; Benn told BBC television. 
 
The 52-48 per cent referendum vote marked the biggest blow since World War II to the European project of forging greater unity across the continent. 
 
Sterling fell as much as 10 per cent against the Dollar on Friday to levels last seen in 1985, while world stocks saw more than $2 trillion wiped off their value. The weekend gave some respite from the turmoil, but with markets opening shortly in Asia, anxiety is growing. 
 
Prime Minister David Cameron resigned on Friday after Britons ignored his passionate appeals to stay in the EU, but left formally notifying Brussels of Britain&#39;s exit to his successor, who is unlikely to be in office for about three months. That signals a long period of limbo. 
 
Chinese Finance Minister Lou Jiwei said the vote &quot;will cast a shadow over the global economy&quot;. 
 
&quot;It&#39;s difficult to predict now,&quot; he said at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing. &quot;The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view.&quot; 
 
Japan likewise fretted over the effect on the global currency market and contemplated official action. &quot;Speculative, violent moves have extremely negative effects,&quot; said Tomomi Inada, policy chief of the ruling LDP party. &quot;If necessary, the government should not hesitate to respond, including currency intervention,&quot; Nikkei daily quoted him as saying. 
 
Prime Minister Shinzo Abe has tried to engineer a weaker Yen to encourage exports to help revive the Japanese economy. But after initial success, investors have sought safety in the Yen this year due to stock market turmoil and now the Brexit vote, pushing the currency back up. 
 
No respite 
 
South Korea&#39;s finance minister also said he feared international markets will remain volatile throughout negotiations on the British exit. 
 
The United States, which during campaigning made clear it wanted Britain to stay in the EU, also showed signs of unease. 
 
Secretary of state John Kerry will meet EU foreign policy chief Frederica Mogherini in Brussels and British Foreign Minister Philip Hammond in London on Monday. 
 
The visit is largely meant to offer symbolic reassurance at a critical juncture for Europe, but a senior US official said Kerry would also stress the importance of other members not following Britain&#39;s lead and further weakening the EU. 
 
Despite the international expressions of concern, respite from the uncertainty is unlikely for months, at the very least. 
 
Cameron has offered to stay on as a caretaker, but he has refused to invoke Article 50 of the EU&#39;s Lisbon Treaty, which allows for two years of exit negotiations. Instead he left that job to his successor, who is due to be elected by his Conservative Party sometime before its annual conference in October. 
 
Only after the new leader has invoked can work on thrashing out Britain&#39;s new relationship with the bloc begin. The man widely tipped as the next prime minister is former London mayor Boris Johnson, the most prominent member of the campaign to leave the EU. 
 
No lying down 
 
Signs are growing that not all the 16 million Britons who voted to stay in the EU are willing to take the result lying down. Many flocked to back an online petition demanding a second vote, with signatures exceeding three million today morning, more than double the figure the previous afternoon. 
 
The petition, posted on Parliament&#39;s website before the referendum, said there should be another vote if the outcome was close on a turnout of less than 75 per cent - three points above Thursday&#39;s figure. 
 
It will have to be considered for debate by lawmakers, but has no legal force and its backers compare with the 17.4 million who voted &quot;leave&quot;. 
 
The referendum has also re-energised support for Scotland, which voted overwhelmingly to remain in the EU, to break away from the United Kingdom instead. 
 
An opinion poll in The Sunday Post said 59 per cent of respondents backed independence, rocketing from 45 per cent of votes cast in a referendum in 2014. 
 
Scottish first minister Nicola Sturgeon has said a fresh independence referendum is possible 
 
&quot;My challenge now as first minister is to work out how I best protect Scotland&#39;s interests, how I try to prevent us being taken out of the EU against our will with all of the deeply damaging and painful consequences that that will entail,&quot; she told the BBC&#39;s Andrew Marr show.&nbsp; 
 
(Reuters)

The 52-48% referendum vote marked the biggest blow since World War II to the European project forging unity across the continent

Turmoil unleashed by Britain's vote to leave the EU engulfed the opposition Labour Party, while policymakers as far away as China, Japan and South Korea fretted today over the threat to global financial stability, hours before markets reopen. In the oldest parliamentary democracy, three million Britons have signed a petition calling for a re-run of Thursday's referendum that split the nation, and one opinion poll showed a strong majority of Scots now want to break with the United Kingdom rather than with the European Union. Labour's left-wing leader Jeremy Corbyn sacked his foreign policy chief as the party plunged into open conflict. His health chief responded by resigning, calling for a new leader and reflecting accusations among pro-EU lawmakers that Corbyn's failure to win over traditional Labour voters had played a major role in the referendum result. Sacked foreign affairs spokesman Hilary Benn also called for Corbyn, who was elected last year largely by Left-wing party members and supporters, to go. "He is a good and decent man but he is not a leader," Benn told BBC television. The 52-48 per cent referendum vote marked the biggest blow since World War II to the European project of forging greater unity across the continent. Sterling fell as much as 10 per cent against the Dollar on Friday to levels last seen in 1985, while world stocks saw more than $2 trillion wiped off their value. The weekend gave some respite from the turmoil, but with markets opening shortly in Asia, anxiety is growing. Prime Minister David Cameron resigned on Friday after Britons ignored his passionate appeals to stay in the EU, but left formally notifying Brussels of Britain's exit to his successor, who is unlikely to be in office for about three months. That signals a long period of limbo. Chinese Finance Minister Lou Jiwei said the vote "will cast a shadow over the global economy". "It's difficult to predict now," he said at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing. "The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view." Japan likewise fretted over the effect on the global currency market and contemplated official action. "Speculative, violent moves have extremely negative effects," said Tomomi Inada, policy chief of the ruling LDP party. "If necessary, the government should not hesitate to respond, including currency intervention," Nikkei daily quoted him as saying. Prime Minister Shinzo Abe has tried to engineer a weaker Yen to encourage exports to help revive the Japanese economy. But after initial success, investors have sought safety in the Yen this year due to stock market turmoil and now the Brexit vote, pushing the currency back up. No respite South Korea's finance minister also said he feared international markets will remain volatile throughout negotiations on the British exit. The United States, which during campaigning made clear it wanted Britain to stay in the EU, also showed signs of unease. Secretary of state John Kerry will meet EU foreign policy chief Frederica Mogherini in Brussels and British Foreign Minister Philip Hammond in London on Monday. The visit is largely meant to offer symbolic reassurance at a critical juncture for Europe, but a senior US official said Kerry would also stress the importance of other members not following Britain's lead and further weakening the EU. Despite the international expressions of concern, respite from the uncertainty is unlikely for months, at the very least. Cameron has offered to stay on as a caretaker, but he has refused to invoke Article 50 of the EU's Lisbon Treaty, which allows for two years of exit negotiations. Instead he left that job to his successor, who is due to be elected by his Conservative Party sometime before its annual conference in October. Only after the new leader has invoked can work on thrashing out Britain's new relationship with the bloc begin. The man widely tipped as the next prime minister is former London mayor Boris Johnson, the most prominent member of the campaign to leave the EU. No lying down Signs are growing that not all the 16 million Britons who voted to stay in the EU are willing to take the result lying down. Many flocked to back an online petition demanding a second vote, with signatures exceeding three million today morning, more than double the figure the previous afternoon. The petition, posted on Parliament's website before the referendum, said there should be another vote if the outcome was close on a turnout of less than 75 per cent - three points above Thursday's figure. It will have to be considered for debate by lawmakers, but has no legal force and its backers compare with the 17.4 million who voted "leave". The referendum has also re-energised support for Scotland, which voted overwhelmingly to remain in the EU, to break away from the United Kingdom instead. An opinion poll in The Sunday Post said 59 per cent of respondents backed independence, rocketing from 45 per cent of votes cast in a referendum in 2014. Scottish first minister Nicola Sturgeon has said a fresh independence referendum is possible "My challenge now as first minister is to work out how I best protect Scotland's interests, how I try to prevent us being taken out of the EU against our will with all of the deeply damaging and painful consequences that that will entail," she told the BBC's Andrew Marr show. (Reuters)

British EU exit turmoil alarms Asia, rocks Labour opposition

Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said today, adding London&#39;s financial centre was at risk of losing its prized &quot;EU passport&quot;. 
 
Banks based in London rely on a so-called EU passport to operate across the bloc&#39;s capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU. 
 
The City of London will not be able to keep that passport if Britain leaves the EU&#39;s single market of trade in goods and services, Villeroy told France Inter radio. 
 
&quot;There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules,&quot; he said. 
 
&quot;It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market.&quot; 
 
Central banks are efficiently dealing with the fallout of Thursday&#39;s UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: &quot;The euro is a solid currency.&quot; 
 
&quot;What happened on Thursday is bad news, first of all for Britain,&quot; he said. &quot;Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy.&quot; 
 
Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016. 
 
(Reuters)

Some London-based banks have said they would shift operations to the euro zone if Britain left the EU

Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said today, adding London's financial centre was at risk of losing its prized "EU passport". Banks based in London rely on a so-called EU passport to operate across the bloc's capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU. The City of London will not be able to keep that passport if Britain leaves the EU's single market of trade in goods and services, Villeroy told France Inter radio. "There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules," he said. "It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market." Central banks are efficiently dealing with the fallout of Thursday's UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: "The euro is a solid currency." "What happened on Thursday is bad news, first of all for Britain," he said. "Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy." Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016. (Reuters)

ECB's Villeroy: Brexit talks must be quick, City of London at risk of losing 'EU passport'

<div style="text-align: justify;">If Britons vote to take their country out of the European Union on June 23, no corner of the global financial market complex will emerge unscathed. 
The invisible thread that links assets as diverse as gold, bank stocks, the Japanese Yen and government bonds would be yanked sharply by Brexit, an event the Bank of England said on Thursday risks &quot;adverse spill-overs to the global economy&quot;. 
With global interest rates and bond yields the lowest on record, central banks running low on crisis-fighting tools and the post-2008 economic recovery flagging, that thread could quickly unravel, with serious consequences for all markets.&nbsp; 
So why will the will of one country&#39;s people in one referendum have such a profound impact on global markets? 
The answer is partly how inter-connected global markets are, and partly timing - the world economic cycle is already very long in the tooth and central banks have far fewer options open to them after nearly a decade of extraordinary policy support. 
Interest rates, yields 
 
Global interest rates are their lowest for 5,000 years, according to Bank of America, but central banks could still cut them further. That could mean the US&nbsp;Federal Reserve reversing its slow-starting tightening cycle, and European Central Bank and Bank of Japan rates going deeper into negative territory. 
Lower rates would also depress bond yields even further, tightening the screw on central and commercial banks. 
 
Over $8 trillion worth of sovereign bonds already carry a negative yield, according to JP Morgan. This means holders of Japanese, German and Swiss debt are paying these governments for the privilege of lending to them, in some cases out to 20 years. 
 
They are willing to accept they will not get all their money back. Even deeper negative yields would increase these losses, raising further doubt that these are truly &quot;safe haven&quot; assets. 
 
But the immediate economic and political uncertainty after a Brexit vote would likely be so great that demand for these bonds would rise anyway, pulling yields even lower. Yield curves, the difference between short- and longer-dated bond borrowing costs, would flatten further. 
 
They are already their flattest for years around the developed world, meaning the premium investors expect for holding longer-dated bonds is shrinking. This is often an ominous signal of low inflation or deflation, and slowing economic growth or possibly recession. 
 
If &quot;core&quot; bond yields would likely fall, yields on lower-rated and riskier bonds would likely rise, widening the spread between the two. This would increase the financing pressure on a wide range of companies around the world and governments in euro zone &quot;periphery&quot; countries like Greece, Italy and Spain. 
 
Banks - Central and Commercial 
 
Flat yield curves are bad news for banks, who make money from borrowing short-term at low rates and lending longer-term at higher rates. Financial stocks have been hit hard this year as the curve flattening has accelerated. 
 
Euro zone banks are down 30 per cent this year, Japanese banks 35 per cent, UK banks 20 per cent, and US banks 10 per cent. 
 
Banks are also being squeezed by negative deposit rates. The ECB, Bank of Japan and Swiss National Bank all charge banks for depositing cash. 
 
It may even become cheaper for banks to put billions of yen, Euros or Francs of their customers&#39; cash in vaults- a possibility German lender Commerzbank is examining. 
 
As for central banks, any move deeper into the uncharted world of negative interest rates would be taken reluctantly. 
 
In the case of the ECB, declining yields would further cut the amount of bonds eligible for purchase as part of its quantitative easing stimulus programme. That would make its inflation target of just under 2 per cent much harder to achieve, in turn putting its credibility under even greater scrutiny. 
 
Financial Planning 
 
Just as the 2007-08 financial crisis was caused by unprecedented stress in the banking system, analysts fear Brexit fallout could again threaten to block the global financial system&#39;s plumbing. 
 
Banks have recovered from 2007-08, but stresses are already appearing in more obscure pockets of dollar-based FX and rates markets that are hitting levels more associated with periods of crisis. The premium for Dollars over Yen in the cross currency basis market is its highest in years. 
 
Spreads between Libor rates and overnight index swap (OIS) rates, broadly a measure of investors&#39; perception of credit risk in the banking system, are also widening. In normal conditions, Libor/OIS spreads should be virtually zero. 
 
Stocks 
 
World stocks are in their longest bull run in history that began on March 9, 2009. But Wall Street&#39;s peak was reached over a year ago, profit growth has slumped, and companies are reluctant to reinvest their record cash piles. 
 
European stocks are down 13 per cent this year, Japan down 20 per cent, and Wall Street is flat. Would they be able to withstand the political, economic and investment shock a Brexit would likely deliver, especially with risk appetite so fragile? 
 
Currencies 
 
Like 2008, a vote for Brexit would almost certainly increase demand for the pre-eminent currency in global trade, banking and financial market trading: the Dollar. 
 
Dollar credit to non-US banks stands at almost $10 trillion, according to the Bank for International Settlements, of which $3.3 trillion is in emerging markets. A stronger Dollar will increase the overall debt burden for these companies, and many emerging market countries, who would be forced to draw down their FX reserves to counter the expected capital outflow and downward pressure on their currencies. 
 
Japan&#39;s Yen, another safe-haven currency, would probably rise too, perhaps as much as 14 per cent, according to Goldman Sachs. This would not be welcome in Tokyo, where policymakers are struggling to kill off deflation once and for all, stoke inflation, reflate the economy and heal the banking system. A higher exchange rate would be damaging on all those fronts. 
 
(Reuters)</div>

World stocks are in their longest bull run in history that began on 9 March, 2009

If Britons vote to take their country out of the European Union on June 23, no corner of the global financial market complex will emerge unscathed. The invisible thread that links assets as diverse as gold, bank stocks, the Japanese Yen and government bonds would be yanked sharply by Brexit, an event the Bank of England said on Thursday risks "adverse spill-overs to the global economy". With global interest rates and bond yields the lowest on record, central banks running low on crisis-fighting tools and the post-2008 economic recovery flagging, that thread could quickly unravel, with serious consequences for all markets. So why will the will of one country's people in one referendum have such a profound impact on global markets? The answer is partly how inter-connected global markets are, and partly timing - the world economic cycle is already very long in the tooth and central banks have far fewer options open to them after nearly a decade of extraordinary policy support. Interest rates, yields Global interest rates are their lowest for 5,000 years, according to Bank of America, but central banks could still cut them further. That could mean the US Federal Reserve reversing its slow-starting tightening cycle, and European Central Bank and Bank of Japan rates going deeper into negative territory. Lower rates would also depress bond yields even further, tightening the screw on central and commercial banks. Over $8 trillion worth of sovereign bonds already carry a negative yield, according to JP Morgan. This means holders of Japanese, German and Swiss debt are paying these governments for the privilege of lending to them, in some cases out to 20 years. They are willing to accept they will not get all their money back. Even deeper negative yields would increase these losses, raising further doubt that these are truly "safe haven" assets. But the immediate economic and political uncertainty after a Brexit vote would likely be so great that demand for these bonds would rise anyway, pulling yields even lower. Yield curves, the difference between short- and longer-dated bond borrowing costs, would flatten further. They are already their flattest for years around the developed world, meaning the premium investors expect for holding longer-dated bonds is shrinking. This is often an ominous signal of low inflation or deflation, and slowing economic growth or possibly recession. If "core" bond yields would likely fall, yields on lower-rated and riskier bonds would likely rise, widening the spread between the two. This would increase the financing pressure on a wide range of companies around the world and governments in euro zone "periphery" countries like Greece, Italy and Spain. Banks - Central and Commercial Flat yield curves are bad news for banks, who make money from borrowing short-term at low rates and lending longer-term at higher rates. Financial stocks have been hit hard this year as the curve flattening has accelerated. Euro zone banks are down 30 per cent this year, Japanese banks 35 per cent, UK banks 20 per cent, and US banks 10 per cent. Banks are also being squeezed by negative deposit rates. The ECB, Bank of Japan and Swiss National Bank all charge banks for depositing cash. It may even become cheaper for banks to put billions of yen, Euros or Francs of their customers' cash in vaults- a possibility German lender Commerzbank is examining. As for central banks, any move deeper into the uncharted world of negative interest rates would be taken reluctantly. In the case of the ECB, declining yields would further cut the amount of bonds eligible for purchase as part of its quantitative easing stimulus programme. That would make its inflation target of just under 2 per cent much harder to achieve, in turn putting its credibility under even greater scrutiny. Financial Planning Just as the 2007-08 financial crisis was caused by unprecedented stress in the banking system, analysts fear Brexit fallout could again threaten to block the global financial system's plumbing. Banks have recovered from 2007-08, but stresses are already appearing in more obscure pockets of dollar-based FX and rates markets that are hitting levels more associated with periods of crisis. The premium for Dollars over Yen in the cross currency basis market is its highest in years. Spreads between Libor rates and overnight index swap (OIS) rates, broadly a measure of investors' perception of credit risk in the banking system, are also widening. In normal conditions, Libor/OIS spreads should be virtually zero. Stocks World stocks are in their longest bull run in history that began on March 9, 2009. But Wall Street's peak was reached over a year ago, profit growth has slumped, and companies are reluctant to reinvest their record cash piles. European stocks are down 13 per cent this year, Japan down 20 per cent, and Wall Street is flat. Would they be able to withstand the political, economic and investment shock a Brexit would likely deliver, especially with risk appetite so fragile? Currencies Like 2008, a vote for Brexit would almost certainly increase demand for the pre-eminent currency in global trade, banking and financial market trading: the Dollar. Dollar credit to non-US banks stands at almost $10 trillion, according to the Bank for International Settlements, of which $3.3 trillion is in emerging markets. A stronger Dollar will increase the overall debt burden for these companies, and many emerging market countries, who would be forced to draw down their FX reserves to counter the expected capital outflow and downward pressure on their currencies. Japan's Yen, another safe-haven currency, would probably rise too, perhaps as much as 14 per cent, according to Goldman Sachs. This would not be welcome in Tokyo, where policymakers are struggling to kill off deflation once and for all, stoke inflation, reflate the economy and heal the banking system. A higher exchange rate would be damaging on all those fronts. (Reuters)

Tracing global market thread that could be unraveled by Brexit

Shanghai jumped on Wednesday as traders brushed off a decision by MSCI to deny its inclusion in an influential list of global benchmarks, while Hong Kong joined a broad Asian rebound after recent heavy losses. 
 
The Shanghai Composite Index jumped 1.53 pe rcent, or 43.59 points, to 2,885.78 while the Shenzhen Composite Index, which tracks stocks on China`s second exchange, advanced 2.98 per cent, or 54.59 points, to 1,887.22. 
And Hong Kong rose 0.46 percent, or 92.83 points, to 20,480.36. 
(AFP)

The Shenzhen Composite Index, which tracks stocks on China's second exchange, advanced 2.98 per cent, or 54.59 points, to 1,887.22

Shanghai jumped on Wednesday as traders brushed off a decision by MSCI to deny its inclusion in an influential list of global benchmarks, while Hong Kong joined a broad Asian rebound after recent heavy losses. The Shanghai Composite Index jumped 1.53 pe rcent, or 43.59 points, to 2,885.78 while the Shenzhen Composite Index, which tracks stocks on China`s second exchange, advanced 2.98 per cent, or 54.59 points, to 1,887.22. And Hong Kong rose 0.46 percent, or 92.83 points, to 20,480.36. (AFP)

Shanghai rallies, investors ignore MSCI disappointment

Asian stocks slipped on Tuesday ahead of the US Federal Reserve&#39;s two-day meeting that begins later in the day&nbsp;amid growing worries that this month&#39;s referendum in Britain could see it exit the European Union. 
 
The Pound and Euro have suffered in recent sessions as economists fear a so-called Brexit would tip Europe back into recession. Voters appear divided ahead of the June 23-referendum, with the &quot;Out&quot; campaign widening its lead over the &quot;In&quot; camp, according to two opinion polls published by ICM on Monday. 
 
MSCI&#39;s broadest index of Asia-Pacific shares outside Japan was down 0.6 per cent&nbsp;after Wall Street lost ground for the third straight session. 
 
Japan&#39;s Nikkei stock index skidded 1.5 per cent after tumbling 3.5 per cent on Monday. 
 
&quot;Short-term hedge funds have started betting on Brexit&nbsp;and futures players will likely dominate the market&#39;s move today,&quot; said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. 
 
The benchmark 10-year Japanese government bond yield fell to as low as minus 0.175 per cent, a fresh record, before edging back to minus 0.170 per cent. 
 
Uncertainty over this week&#39;s Federal Reserve policy meeting has weighed on markets, even while the US central bank is widely expected to leave rates unchanged after the much weaker-than-expected May non-farm payrolls report. 
 
&quot;The committee was actively preparing markets for a June-July rate hike until the release of the May employment report and is unlikely to give up its tightening bias absent additional information that labour markets are weakening,&quot; analysts at Barclays wrote. 
 
&quot;Nevertheless, the abrupt slowing in employment and falling long-run inflation expectations should raise alarm bells, and risk management concerns suggest delaying action until after the outcome of the UK referendum,&quot; they said. 
 
The Bank of England, Swiss National Bank and the Bank of Japan will also meet this week, and are similarly expected to stand pat on policy with the Brexit vote looming. 
 
The dollar index, which tracks the greenback against a basket of six rival currencies, edged up slightly to 94.395, moving back toward the overnight high of 94.750. That was its highest since the downbeat US jobs report toppled the dollar on June 3. 
 
The perceived safe-haven Yen has benefited from investors&#39; risk aversion. The dollar was down 0.2 per cent at 105.99 Yen, moving back toward Monday&#39;s low of 105.735, its weakest level since early May. 
 
Japanese Finance Minister Taro Aso issued a fresh warning against renewed strength in the Yen, saying that he would &quot;firmly respond&quot; if rapid and speculative moves persisted in the foreign exchange market. 
 
The Euro was slightly lower at $1.1290. Against the Yen, it skidded 0.3 per cent to 119.69, moving back toward a more than three-year low plumbed in the previous session. 
 
Sterling also notched a three-year low against the Yen on Monday, and was last down 0.8 per cent at 150.35 Yen. Against the Dollar, the Pound dropped 0.6 per cent to $1.4180. 
 
Crude oil prices continued to slip, pressured by the strong US dollar and worrying economic prospects in Europe and Asia, though losses were contained by ongoing supply outages in Nigeria. 
 
Brent was down 1 per cent at $49.84 per barrel, while US crude shed 1.1 per cent to $48.34.

The Pound and Euro have both suffered over fears that UK leaving the EU will cause another European recession

Asian stocks slipped on Tuesday ahead of the US Federal Reserve's two-day meeting that begins later in the day amid growing worries that this month's referendum in Britain could see it exit the European Union. The Pound and Euro have suffered in recent sessions as economists fear a so-called Brexit would tip Europe back into recession. Voters appear divided ahead of the June 23-referendum, with the "Out" campaign widening its lead over the "In" camp, according to two opinion polls published by ICM on Monday. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.6 per cent after Wall Street lost ground for the third straight session. Japan's Nikkei stock index skidded 1.5 per cent after tumbling 3.5 per cent on Monday. "Short-term hedge funds have started betting on Brexit and futures players will likely dominate the market's move today," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. The benchmark 10-year Japanese government bond yield fell to as low as minus 0.175 per cent, a fresh record, before edging back to minus 0.170 per cent. Uncertainty over this week's Federal Reserve policy meeting has weighed on markets, even while the US central bank is widely expected to leave rates unchanged after the much weaker-than-expected May non-farm payrolls report. "The committee was actively preparing markets for a June-July rate hike until the release of the May employment report and is unlikely to give up its tightening bias absent additional information that labour markets are weakening," analysts at Barclays wrote. "Nevertheless, the abrupt slowing in employment and falling long-run inflation expectations should raise alarm bells, and risk management concerns suggest delaying action until after the outcome of the UK referendum," they said. The Bank of England, Swiss National Bank and the Bank of Japan will also meet this week, and are similarly expected to stand pat on policy with the Brexit vote looming. The dollar index, which tracks the greenback against a basket of six rival currencies, edged up slightly to 94.395, moving back toward the overnight high of 94.750. That was its highest since the downbeat US jobs report toppled the dollar on June 3. The perceived safe-haven Yen has benefited from investors' risk aversion. The dollar was down 0.2 per cent at 105.99 Yen, moving back toward Monday's low of 105.735, its weakest level since early May. Japanese Finance Minister Taro Aso issued a fresh warning against renewed strength in the Yen, saying that he would "firmly respond" if rapid and speculative moves persisted in the foreign exchange market. The Euro was slightly lower at $1.1290. Against the Yen, it skidded 0.3 per cent to 119.69, moving back toward a more than three-year low plumbed in the previous session. Sterling also notched a three-year low against the Yen on Monday, and was last down 0.8 per cent at 150.35 Yen. Against the Dollar, the Pound dropped 0.6 per cent to $1.4180. Crude oil prices continued to slip, pressured by the strong US dollar and worrying economic prospects in Europe and Asia, though losses were contained by ongoing supply outages in Nigeria. Brent was down 1 per cent at $49.84 per barrel, while US crude shed 1.1 per cent to $48.34.

Asian shares slip as Brexit vote looms

Gold inched down on Tuesday as investors waited for cues from a two-day US Federal Reserve meeting beginning later in the day and a June 23-referendum that will decide whether Britain will exit the European Union. 
 
Spot gold was down 0.4 per cent at $1,279.16 an ounce as of 0648 GMT, but has gained more than 5 per cent this month, hitting a peak of $1,287 on Monday, its highest since May 16. 
 
US gold fell 0.4 per cent to $1,282.30. 
 
&quot;I think investors have decided to take profits and some of them are staying on the sidelines before taking a decision on what to do next until the Fed makes an announcement,&quot; said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central. 
 
Bullion, which is often perceived as a hedge against economic and financial uncertainty, has been driven by rising investor risk aversion before key central bank meetings this week. 
 
Apart from the Fed, the Bank of England, Swiss National Bank and the Bank of Japan will meet this week, and are expected to hold monetary policies steady against a backdrop of caution about the global economic outlook. 
 
The safe-haven appeal of gold, which is near a four-week high hit in the previous session, could get a further boost if a vote by Britain to leave the 28-member group, dubbed &quot;Brexit&quot;, pushes Europe back into a recession. 
 
The British pound remained fragile near a two-month low against the dollar, while Asian stocks slipped on Tuesday on concerns ahead of the referendum. 
 
Britain&#39;s &quot;Out&quot; campaign widened its lead over the &quot;In&quot; camp ahead of the referendum according to two opinion polls published by ICM on Monday. 
 
&quot;We think that the risk of Britain leaving has now increased substantially and the Fed will therefore signal its willingness in no uncertain terms to &#39;stay the course&#39; in light of this potential &#39;Black Swan&#39; event,&quot; INTL FCStone analyst Edward Meir said in a note. 
 
&quot;This will likely enable gold to push even higher over the next few days, at least until the polls start to swing the other way.&quot; 
 
Meanwhile, Hong Kong Exchanges and Clearing Ltd is aiming to launch its planned physically-delivered gold futures contract in September, said&nbsp;its head on Tuesday. 
 
Holdings in SPDR Gold Trust, the world&#39;s largest gold-backed exchange-traded fund, rose 0.27 per cent to 896.30 tonnes on Monday, the highest since October 2013. 
 
Spot silver fell 0.8 percent to $17.29 per ounce, after touching a one-month high of $17.45 on Monday.

Gold is likely to get a further boost if a vote by Britain to leave the 28-member group dubbed "Brexit," pushes Europe back into a recession

Gold inched down on Tuesday as investors waited for cues from a two-day US Federal Reserve meeting beginning later in the day and a June 23-referendum that will decide whether Britain will exit the European Union. Spot gold was down 0.4 per cent at $1,279.16 an ounce as of 0648 GMT, but has gained more than 5 per cent this month, hitting a peak of $1,287 on Monday, its highest since May 16. US gold fell 0.4 per cent to $1,282.30. "I think investors have decided to take profits and some of them are staying on the sidelines before taking a decision on what to do next until the Fed makes an announcement," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central. Bullion, which is often perceived as a hedge against economic and financial uncertainty, has been driven by rising investor risk aversion before key central bank meetings this week. Apart from the Fed, the Bank of England, Swiss National Bank and the Bank of Japan will meet this week, and are expected to hold monetary policies steady against a backdrop of caution about the global economic outlook. The safe-haven appeal of gold, which is near a four-week high hit in the previous session, could get a further boost if a vote by Britain to leave the 28-member group, dubbed "Brexit", pushes Europe back into a recession. The British pound remained fragile near a two-month low against the dollar, while Asian stocks slipped on Tuesday on concerns ahead of the referendum. Britain's "Out" campaign widened its lead over the "In" camp ahead of the referendum according to two opinion polls published by ICM on Monday. "We think that the risk of Britain leaving has now increased substantially and the Fed will therefore signal its willingness in no uncertain terms to 'stay the course' in light of this potential 'Black Swan' event," INTL FCStone analyst Edward Meir said in a note. "This will likely enable gold to push even higher over the next few days, at least until the polls start to swing the other way." Meanwhile, Hong Kong Exchanges and Clearing Ltd is aiming to launch its planned physically-delivered gold futures contract in September, said its head on Tuesday. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.27 per cent to 896.30 tonnes on Monday, the highest since October 2013. Spot silver fell 0.8 percent to $17.29 per ounce, after touching a one-month high of $17.45 on Monday.

Gold dips, but lingers near four-week high ahead of Fed meeting

Japanese stocks suffered their biggest daily percentage drop in a month today hit by a stronger Yen, while global concerns such as the upcoming Brexit vote and worries about Japan&#39;s fiscal policies sapped risk appetite. 
 
The Nikkei share average fell 2.3 per cent to 16,562.55, the biggest daily drop since May 2. 
 
The already pressured dollar sank further against the yen after Bank of Japan board member Takehiro Sato reiterated his view that the BOJ should consider its 2 per cent inflation target as a long-term goal with room for flexibility, rather than one with a rigid deadline. 
 
That meant the BOJ should modify its current massive asset buying programme, which was intended to be a short-term move aimed at shocking the public out of its deflationary mindset. 
 
The broader Topix declined 2.2 per cent to 1,331.81 and the JPX-Nikkei Index 400 fell 2.3 per cent to 12,004.95.

The Nikkei share average fell 2.3 per cent to 16,562.55, the biggest daily drop since May 2. The upcoming Brexit vote and worries about Japan's fiscal policies play their part

Japanese stocks suffered their biggest daily percentage drop in a month today hit by a stronger Yen, while global concerns such as the upcoming Brexit vote and worries about Japan's fiscal policies sapped risk appetite. The Nikkei share average fell 2.3 per cent to 16,562.55, the biggest daily drop since May 2. The already pressured dollar sank further against the yen after Bank of Japan board member Takehiro Sato reiterated his view that the BOJ should consider its 2 per cent inflation target as a long-term goal with room for flexibility, rather than one with a rigid deadline. That meant the BOJ should modify its current massive asset buying programme, which was intended to be a short-term move aimed at shocking the public out of its deflationary mindset. The broader Topix declined 2.2 per cent to 1,331.81 and the JPX-Nikkei Index 400 fell 2.3 per cent to 12,004.95.

Nikkei hit by strong Yen, suffers biggest drop in a month

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