Asian shares languish as Italian turmoil hits world markets

Asian markets track European losses, strong yen hits Nikkei | Charlotte Observer

Global markets and the Euro his hard by the Italian political stalemate

The euro out-muscled the dollar on Thursday, jumping by 0.25 percent to trade at 1.16913, after having risen 1.1 percent on Wednesday, marking its second-biggest daily gain this year.

"But the markets are likely to remain in thrall of the political crisis in Italy".

Apart from developments in Italy, investors are also looking to the upcoming euro zone consumer price data at 0900 GMT, which is expected to show inflation has accelerated to 1.6 percent in May.

Engineering business Smiths Group rallied 2.7 percent after confirming that it is in very early stage discussions about a potential combination of its medical division with ICU Medical, Inc.

Even the idea of Italy leaving the euro was enough to send the country's bond yields to multi-year highs on Tuesday.

Mr Mattarella gave the leaders an unspecified amount of time to form a coalition government after markets plunged on news of a proposed interim administration that would take Italy swiftly to new elections. Against the Swiss franc, it fell by a similar margin at 1.1528 francs. The Shanghai Composite Index sank 0.6 percent to 3,116.59.

"There could be contagion via Italy's sovereign bond market, which is the third largest in the world, but exposure is again concentrated in Europe", said Capital Economics' Andrew Kenningham.

The U.S. currency is heading for its best month in a year and a half .DXY - a move that is hurting many emerging market countries that borrow in dollars.

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Elsewhere in bonds, US 10-year Treasury yields fell to six-week lows of 2.883 percent after a USA holiday on Monday.

South Korea's KOSPI rose 0.8 percent, buoyed by stocks which are seen as benefiting from a further thawing in tensions with Pyongyang.

"President (Donald) Trump has not accomplished very much in terms of trade issues and is likely to remain vocal with the USA mid-term elections coming up".

The Milan stock index was down almost 3 percent, weighing particularly hard on banks, and Italian bonds suffered a plunge reminiscent of the worst days of the financial crisis of 2011. Australia's S&P/ASX 200 added 0.2 percent to 6,013.60.

ENERGY: U.S. crude oil climbed 43 cents to $67.16 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price worldwide oils, added 71 cent to $76.20 a barrel in London. The July contract was last down 1.6 percent at $66.81 a barrel. It dropped 4 percent on Friday, battered by reports that OPEC countries and Russian Federation could start pumping more oil soon.

Regarding the safe-haven assets, reignited fears of a global trade war supported Yen, The greenback edged lower by 0.09 percent versus the Japanese Yen, to close at 108.81, gravitating back towards Tuesday's five-week low of 108.10.

Brent crude futures edged up 0.3 per cent after dropping to $74.49 per barrel on Monday, their lowest in about three weeks.

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