LIVE MARKETS-Taper Tantrum? Not just yet

* European stock futures down 0.5%

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TAPER TANTRUM? NOT JUST YET (0748 GMT)

Finally, markets have the news they've been waiting days
for: U.S. President-elect Joe Biden is proposing a $1.9 trillion
stimulus plan to jump-start the world's largest economy and
accelerate its response to COVID-19.

This is at the upper end of expectations. But in a
buy-the-rumour, sell-the-fact reaction, equities have eased a
touch and U.S. Treasury yields, which have shot higher on belief
that a big fiscal package will boost inflation, are also off
recent highs.

And for those looking for a taper tantrum, Federal Reserve
Chair Jerome Powell is not buying it, saying late on Thursday it
was too early for the Fed to adjust its monthly bond purchases.

His comments have paused a rally in the dollar for now.
Elsewhere, Bitcoin is recovering after a nearly $12,000 plunge
from the record $42,000 hit last week.

Concern over rising COVID-19 cases in China and signs of
fresh strains with Washington may also explain signs of caution
in markets. Executives of state-owned enterprises, officials of
the Chinese Communist Party and military, and oil giant CNOOC
will face new restrictions from the Trump
administration for allegedly using coercion against states with
rival South China Sea claims.

In Europe, political uncertainty in Italy remains in focus
although a snap election is still viewed as unlikely. Focus also
turns to Germany, where chancellor Angela Merkel's Christian
Democratic Union party on Saturday votes for a new leader and
will be a likely contender for next Chancellor.

Shares in German software group SAP are up 2% in
pre-market trade after preliminary annual results came at the
high end of guidance.

JP Morgan, Citigroup and Wells Fargo
report fourth-quarter results. Expectations are for financials
earnings to have dropped more than 6% but that's better than
what's forecast for the S&P 500 overall.

Key developments that should provide more direction to
markets on Friday:

- UK economy shrinks 2.6% in Nov, first drop since April.

- Italy's Renzi does not believe PM Conte has backing to win
no-confidence vote - La Stampa.

- U.S. retail sales, PPI 1330 GMT

- Fitch to review UK credit rating

- An emerging market rally lifted assets under management
(AUM) at money manager Ashmore by 9% in Q4

(Dhara Ranasinghe)

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EUROPE IN THE RED ON BIDEN’S CHALLENGES, PANDEMIC

European stock futures are in the red as markets focus on
the challenges U.S. president-elect Joe Biden will face in
getting approved a $1.9 trillion stimulus package, while
pandemic concerns continue to weigh on sentiment.

Investors are also concerned about possible tax increases
they expect to be part of Biden’s future plans.

China reporting the highest number of COVID-19 cases in more
than 10 months on Friday, with more than 28 million people under
lockdown, is dampening risk-appetite across the board.

(Stefano Rebaudo)

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