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Asian markets swing on tempered trade hopes, weak data

HONG KONG: Asian markets fluctuated Thursday as optimism over China-US trade talks was tempered by Donald Trump’s top negotiator, while investors also digested weak factory data from Beijing and fresh geopolitical tensions in Kashmir.
The global rally that has characterised most of this year took a knock after US Trade Representative Robert Lighthizer told lawmakers that real progress had been made with China, but a lot of work was still needed before a pact is signed.
While his comments did not derail expectations of an agreement at some point with both sides reporting good progress and Trump delaying a deadline for a deal it did give traders pause for thought, observers said.Lighthizer said a trade deal hasnt been agreed yet, bringing some reality back to euphoric markets post-Trumps tariff extension, despite the fact Lighthizer also announced both sides had agreed on an enforcement process, said OANDA senior market analyst Jeffrey Halley.
After a negative lead from Wall Street, Asian markets swung Thursday and Tokyo went into the break 0.4 percent lower.Hong Kong was up 0.4 percent mid-morning, Shanghai gained 0.3 percent, Sydney put on 0.2 percent and Wellington was up 0.4 percent.But Singapore slipped 0.5 percent and Seoul shed 0.2 percent, while Jakarta retreated 0.5 percent and Manila lost 0.7 percent.
Also fuelling selling pressure was figures showing Chinese manufacturing activity contracted for a third straight month in February, with factories hit by the long Lunar New Year break, concerns about slowing growth and uncertainty from the trade row. Better sense-However, Zhou Hao, a senior emerging markets economist at Commerzbank AG, said the results were likely not as bad as they seemed and the outlook could be positive.
I think we still want to wait for the next months reading as this months is distorted by the holiday, he said.Also the economy could stabilise this month.
Rising input prices suggest that there is no need to worry about deflation, so the question now rests on whether the economy has enough impetus.Nervousness continues to stalk trading floors after Pakistan and India said they had shot down each others fighter jets on Wednesday, fuelling worries of a conflict between the nuclear-armed neighbours.
The developments followed the February 14 suicide bombing by militants in the disputed Kashmir region that that killed 40 Indian troops.Pakistan Prime Minister Imran Khan called for better sense to prevail.With politicians on both nuclear-armed sides making soothing comments overnight, the trick will be finding a mutually face-saving path to de-escalate the situation. Of course, this will be much easier said than done, and the potential for hostilities to ratchet higher remains very high, Halley added.
On currency markets the pound held gains after touching a near eight-month high earlier Thursday after MPs gave Prime Minister Theresa May more time to work on her EU withdrawal deal after she promised they could delay Brexit if necessary.Sterling was also given a boost after the opposition Labour Party said it would back a second referendum, having lost a vote on its own Brexit plan Wednesday.

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May heads to Brussels for Brexit crisis talks

LONDON (AFP) – British Prime Minister Theresa May on Tuesday prepared to head to Brussels for talks on the Brexit crisis, even though EU leaders have refused any renegotiation of the deal she agreed with them in December.
With just five weeks to go until Brexit on March 29, the deal has been blocked by the British parliament and the country appears headed for a chaotic exit that economists warn will wreak havoc in both Britain and the European Union.May is due to meet European Commission chief Jean-Claude Juncker at 1730 GMT on Wednesday, two days after Brexit Secretary Stephen Barclay and Attorney General Geoffrey Cox visited the EU headquarters.The visit also comes a day before Jeremy Corbyn, leader of the opposition Labour Party, is expected to meet the EU s Brexit negotiator Michel Barnier as part of a diplomatic ballet aimed at heading off a no-deal Brexit.May s spokesman said the prime minister was working hard to secure legally binding changes to the backstop – a controversial part of the withdrawal agreement she signed with EU leaders at a summit in December.The backstop would keep Britain in the EU customs union and give Northern Ireland a different economic status from mainland Britain until a way is found to ensure there is no return to a hard border with EU member Ireland.Stefaan De Rynck, a senior advisor to Barnier, warned in London Tuesday that there will be no reopening of the withdrawal agreement, saying there was zero appetite among the other 27 EU countries.He refused to say whether the EU would impose a border in the event of a no deal Brexit, adding that in such a situation, the actions taken by Britain in the first weeks and months.would be terribly crucial for future of this country.May s deal was overwhelmingly rejected by British MPs last month in a vote that united Conservative pro-EU moderates and Brexit hardliners in opposition.
May has since said she will seek to renegotiate the deal to the dismay of European allies who have repeatedly warned her against using time pressure in an attempt to extract concessions.The EU need to work with us in order to give parliament the insurance it needs, May s spokesman said, adding: The prime minister believes that she can secure changes in relation to the backstop MPs want — there is a majority in parliament for a deal.May s critics accuse her of wasting time before holding another vote in parliament on her deal, hoping that the looming deadline will change MPs minds.Speaking at a manufacturing conference in London, Corbyn said May was being extraordinarily reckless in her Brexit strategy.This government is running down the clock, he said.The Labour leader promised that his party would keep all options on the table, including the option of a public vote.
A lifelong eurosceptic, Corbyn has come under intense pressure from within his party to push more forcefully for a second referendum.He has instead urged May to agree to negotiate for Labour s Brexit plan, which would involve agreeing to Britain staying permanently in the EU customs union.
EU leaders have repeatedly said they will not renegotiate the legally-binding withdrawal agreement but could make changes to an accompanying political declaration with more long-term trade aims.We cannot accept a time limit to the backstop or a unilateral exit clause, Juncker s spokesman Margaritis Schinas said on Tuesday.
But former European Commission president Jose Manuel Barroso told a Euronews Brexit conference in London that the EU could pull off an impossible compromise.It is possible, with some creativity and imagination, to find some kind of compromise, he said.There is still some room for negotiation.He added that the European Commission has a remarkable capacity to find compromises that seem impossible until they are done.

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