* China agriculture delegation scraps U.S. farm visit to Montana
* MSCI world equity index slips
* Central bank easing helps risk sentiment but trade tensions hurt
* Treasury yields fall; dollar slips vs yen
* Oil prices edge higher
(Updates to U.S. afternoon trading)
By Saqib Iqbal Ahmed
NEW YORK, Sept 20 (Reuters) - An index of global stock markets
gave up early gains after Chinese agriculture officials who were to
visit U.S. farm states next week canceled their trip, dampening
optimism on U.S.-China trade talks.
Revived worries about the state of the ongoing trade tensions
between Washington and Beijing drove Treasury yields lower and pushed
the U.S. dollar down against the safe-haven Japanese yen.
Stocks had started the day stronger as stimulus measures by major
central banks eased worries about growth. But optimism faded following
the report that the Chinese officials canceled their visit.
The cancellation came as U.S.-Chinese trade talks were held in
Washington and U.S. President Donald Trump said he wanted a complete
trade deal with the Asian nation, not just an agreement for China to
buy more U.S. agricultural goods.
The MSCI world equity index , which tracks shares in 47
countries, was 0.07% lower.
On Wall Street, stocks, which had started the day strong following
China cutting a key lending rate for the second straight month,
reversed course on the news of the canceled farm visits.
Equity markets have largely welcomed the central bank moves in
recent days, including interest rates cuts by the European Central
Bank and the U.S. Federal Reserve.
"It's trade-related and markets are just hyper-sensitive to
trade," said Paul Nolte, portfolio manager at Kingsview Asset
Management in Chicago.
For the week, the S&P 500 and the Nasdaq were set to end
slightly lower, their first weekly loss in four weeks.
The Dow Jones Industrial Average fell 50.81 points, or 0.19%,
to 27,043.98, the S&P 500 lost 5.33 points, or 0.18%, to
3,001.46 and the Nasdaq Composite dropped 44.04 points, or 0.54%,
The pan-European STOXX 600 index finished up 0.29%, after
giving up some of the gains logged earlier in the session.
Increased concerns that the United States and China are unlikely
to forge a trade deal in the near term drove U.S. Treasury yields
Benchmark 10-year notes gained 5/32 in price to yield 1.7579%,
down from 1.774% on Thursday.
Bonds were also supported after the New York Federal Reserve said
it plans to pour cash into the U.S. banking system through early
October to avert another market disruption, after the cost of loans in
the overnight repurchase agreement (repo) market soared to 10% on
In foreign exchange markets, the dollar fell sharply against the
yen as investors weighed the latest developments on the U.S.-China
The yen tends to attract demand in times of market stress as the
currency is backed by Japan’s current account surplus, which offers it
more resilience than currencies of deficit-running countries.
The dollar was 0.27% lower against the Japanese currency. Against
a basket of major currencies , the greenback was up 0.24%.
Oil prices edged higher, with Brent set for its biggest weekly
gain since January, lifted by rising Middle East tensions and supply
concerns after an attack on Saudi Arabia's energy industry last weekend.
"The question is, 'Can they convince the market that they can
keep their oil fields safe?'" said Phil Flynn, an analyst at
Price Futures Group in Chicago, in a note.
At 1826 GMT, U.S. crude fell 0.07% to $58.09 per barrel and
Brent was last at $64.41, up 0.02% on the day.
Lingering tensions in the Middle East along with increased worries
about the trade tensions supported gold, and the yellow metal was on
pace for its first weekly rise in four. Spot gold
was up 0.81% at $1,511.21 an ounce.
Graphic: World FX rates in 2019
(Reporting by Saqib Iqbal Ahmed; Additional reporting by Ambar
Warrick and Medha Singh in Bengaluru, Julia Payne in London, Florence
Tan in Singapore)
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