* "Quadruple witching" spells volatility risk
* Global stocks head for first weekly gain in three
* FTSE slips as Britain announces new restrictions
* Yen, yuan shine as pressure returns to USD
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
By Tom Arnold
LONDON, Sept 18 (Reuters) - Stocks struggled on Friday on
investors' concerns about a resurgence in coronavirus cases and
lingering disappointment that central banks merely affirmed
their monetary support this week without promising new stimulus.
The dollar was back to near the bottom of its recent range
following its brief journey higher after Wednesday's U.S.
Federal Reserve meeting.
The Fed promised to keep rates low for a long time but gave
no new hints about any further monetary support. The Bank of
England and the Bank of Japan sounded more open to further
stimulus on Thursday but also took no action.
Tensions in Asia also bubbled up after Taiwan scrambled
fighter jets as multiple Chinese aircraft approached the island
during Chinese military exercises.
In choppy trade, the pan-European STOXX 600 was
flat, clawing back from earlier losses, but the FTSE was
0.2% lower as Britain announced restrictions for more areas of
the country to tackle rising coronavirus rates.
The mood remained cautious as France confirmed 10,593 new
coronavirus infections on Thursday, its highest single-day count
since the pandemic began, and Britain saw a surge in cases.
Spain's Bankia slipped 4% after Caixabank
valued it at 4.3 billion euros ($5.10 billion) as part
of a deal that will create Spain's biggest domestic bank.
Euronext added 5.6% after London Stock Exchange
said it had entered into exclusive talks to sell Borsa
Italia to the French exchange operator.
MSCI's broadest index of Asia-Pacific shares outside Japan
added 0.5%. Stocks in China made their strongest
gains in three weeks, with the CSI300 index adding
2.2%, a move led by financial companies.
The U.S.-heavy MSCI world shares index was
up 0.2%, heading for its first weekly gain in three weeks.
Signalling a stemming of Thursday's losses on Wall Street,
S&P 500 futures <ESc1 were last up 0.1% while Nasdaq 100 futures
were up 0.5%.
But analysts warned about potential volatility related to a
quarterly expiration of U.S. stock options, stock index futures
and index option contracts, known as "quadruple witching".
"You tend to get a lot of volume going through markets on
days like this and that can exacerbate volatility," said James
Athey, investment director at Aberdeen Standard Investments.
"Recently, markets have been listless and lacking any sort
of driver in either direction. In a bigger picture sense,
politics will be an increasing focus until the end of the year,
with the U.S. elections and Brexit negotiations, which don't
seem to be progressing at all, and European elections, with
Italian regional elections next week."
YUAN, YEN STAND OUT
U.S. consumer confidence data is due later on Friday.
Figures on Thursday showed the recovery in the U.S. labour
market is stalling.
That meant the dollar extended overnight losses and
was down 0.1%, set for a weekly loss.
Shrugging off a dovish-sounding Bank of Japan, the Japanese
yen gained versus the dollar, staying close to the seven-week
high hit on Thursday, at 104.380.
The New Zealand dollar was one of the biggest
movers, gaining overnight and hitting its highest in 1-1/2 years
in early London trading after the finance minister sounded
positive about the economy in television interviews.
The yuan was up above 1% for the week and on track
for its longest weekly winning streak since early 2018 as bond
inflows into China's capital-controlled economy buoy the
currency.
"We see no signals from the (People's Bank of China's) daily
yuan fixing that suggest authorities are concerned about recent
trends," said Nomura analysts in a note. "We remain short
USD/CNH through both cash and options."
In European bond markets, Italy's 10-year bond yield hit its
lowest level since early March and was last at 0.945%, down 1.1
basis points on the day.
In commodity markets, oil's earlier rally, spurred in part
by Saudi Arabia pressing allies to stick to output quotas,
faded.
Brent crude was flat at $40.97 a barrel, while U.S.
oil futures were up 0.1% to $41.01 a barrel.
(Additional reporting by Tom Westbrook in Singapore; Editing by
Catherine Evans and Hugh Lawson)
