European stocks retreat with bonds; dollar slips

European stocks retreated with bonds as political strains from Italy to the UK outweighed optimism over waning global trade tensions. The euro and pound headed higher as the US dollar came under pressure.

Banking and technology shares pulled the Stoxx Europe 600 Index lower as investors weighed ongoing Brexit turmoil and Italy’s struggles to form a government. Government bonds retreated across the eurozone and US Treasury yields edged higher.

Most Asian markets advanced and equity futures pointed to a rise in US shares at the open. Emerging-market stocks built on their first weekly advance in four weeks.

In a sign that he may be open to easing trade tensions ahead of a meeting in Washington with Chinese officials this week, President Donald Trump made a major reversal on an earlier move to block telecom equipment maker ZTE Corp from its US suppliers. Political pressures will still remain high on the agenda for the week amid efforts to form an Italian government, ongoing Brexit turmoil, and the US formally moving its embassy in Israel.

Traders closely watched Malaysia’s equity market on Monday after Mahathir Mohamad ousted Najib Razak’s ruling coalition in a historic power shift. Stocks and the Ringgit both recovered from an early slump to climb higher.

Elsewhere, oil retreated below $71 a barrel as the United Arab Emirates said OPEC has enough spare production capacity to mitigate any impact on crude markets if the U.S. re-imposes sanctions on Iran.

This article provided by NewsEdge.