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GLOBAL MARKETS-Stocks gain as investors eye stimulus clues at Jackson Hole

Wed, 26th Aug 2020 12:08

* U.S. benchmark bond yields rise

* Euro STOXX 600 gains 0.4%

* Fed chair due to speak at Jackson Hole on Thursday

* Markets expect clues on loose policy

* Gold falls for fourth straight day

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Tom Wilson

LONDON, Aug 26 (Reuters) - Stocks and bond yields rose on
Wednesday as investors made riskier bets amid optimism about
U.S.-China trade and expectations of ample central bank stimulus
before a key speech by the U.S. Federal Reserve chairman at
Jackson Hole.

The broad Euro STOXX 600 shrugged off early losses
to gain 0.4% by late morning, with indexes in Frankfurt
and Paris up 0.5% and 0.2% respectively, though London's
FTSE 100 was down 0.2%.

The MSCI world equity index, which tracks
shares in 49 countries, gained 0.1%. Wall Street futures gauges
were flat.

Traders also sold bonds, with the yield on U.S. 10-year debt
rising as high as 0.7190%, close to a two-month
peak, as markets begin to price in a return to inflation and
growth for major economies.

A day earlier, investors had dumped benchmark U.S. debt
and bought stocks after a productive call between top
Beijing and Washington officials stoked hopes of smoother trade
relations between the world's two biggest economies.

Euro zone bonds calmed, with safe-haven Bund yields
rising a smidgeon after enduring on Tuesday their
biggest daily losses since May as better German economic data
and trade dented hunger for government debt.

For many investors, bets on looser policy - the major driver
of a powerful recovery for U.S. stocks from pandemic-driven lows
in March - were at the forefront.

Fed Chairman Jerome Powell is due to speak at a virtual
Jackson Hole symposium on Thursday, where investors think he
could outline a more accommodative approach to inflation which
would open the door to easier policy for a long time to come.

"Jackson Hole is a big one," said Jeremy Gatto, an
investment manager at Unigestion in Geneva. "Investors are
expecting a bit more clarity on what the Fed is looking at. We
are likely to see a high level of accommodation for some time to
come."

MORE POSITIVE

In another sign of a more positive mood, safe-haven gold
faced collateral damage from rising bond yields, falling
0.5% as it headed for a fourth straight day of losses.

"Higher yields also tend to act as a headwind against the
gold price," said John Hardy, head of FX strategy at Saxo Bank,
in a note to clients.

The dollar edged up slightly, after taking a knock a day
earlier on data that showed U.S. consumer confidence falling to
the lowest in more than six years because of worries over the
impact of the coronavirus pandemic on jobs.

Against a basket of currencies the dollar added 0.1%
to 93.118, with prospects for the greenback seen as limited
should Powell send a dovish message at Jackson Hole.

Data due later in the day is forecast to show growth in U.S.
durable goods orders slowed in July, potentially offering
further bad news for the dollar.

The Japanese yen fell 0.2%, with MUFG analysts
arguing that uncertainty over the health of Shinzo Abe, the
long-serving premier, was adding to downward pressure along with
advances for stocks and rising U.S. yields.

In commodity markets, a positive mood on trade and U.S.
producers shutting most of their offshore output in the Gulf of
Mexico ahead of Hurricane Laura kept Brent crude oil mostly
steady.

Producers evacuated 310 offshore facilities and shut 1.56
million barrels per day of crude output, 84% of Gulf of Mexico's
offshore production - near the 90% outage that Hurricane Katrina
brought 15 years ago.

Brent futures lost 7 cents, or 0.2%, to $45.78 a
barrel by late morning, shedding earlier gains, with the
benchmark having settled at a five-month high a day earlier.

For Reuters Live Markets blog on European and UK stock
markets, please click on:

(Reporting by Tom Wilson
Editing by Toby Chopra and David Holmes)

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