General

Asian markets cautious as trade tensions weigh, pound holds gains

Tuesday as concerns over trade and emerging markets drag on confidence but

the pound held on to gains after the European Union's chief Brexit

negotiator's optimistic remarks.

Donald Trump ramped up the China-US tariffs row late last week by

threatening to tax all imports from the Asian giant, sending equities further

into the red Monday, with Hong Kong and Shanghai taking the brunt of the

pain.

While some investors are returning to pick up bargain stocks, the ongoing

worry about a possible full-blown trade war between the world's top two

economies is keeping a lid on prices.

Hong Kong and Shanghai each dropped 0.2 percent in early business, while

Singapore and Seoul lost 0.1 percent, Manila shed one percent and Taipei gave

up 0.3 percent.

However, Tokyo rose one percent by the break as exporters were supported by

a weaker yen, while Sydney was up 0.5 percent.

Dealers are also awaiting developments in Argentina, which is holding talks

with the International Monetary Fund on accessing bailout cash as it looks to

avert an all-out crisis.

The country's troubles, along with worries in Turkey and South Africa, have

led to concerns of contagion in other emerging markets or even the global

economy.

Relief rally

On currency markets, sterling held up after surging Monday on the back of

comments from Michel Barnier that lifted hopes Britain will leave the

European Union with some sort of divorce deal.

He said it was realistic to expect an agreement within the next eight

weeks, with Britain slated to leave early next year.

Barnier's optimism helped trigger a sterling relief rally as the markets

were buying back volumes of short sterling position, said Stephen Innes,

head of Asia-Pacific trade at OANDA, adding that a deal could lead to a

possible increase in interest rates.

This positive shift could have a significant central bank effect over the

medium term as it's thought that a Brexit deal is a big piece of the EU

puzzle that has been keeping both Bank of England and the European Central

Bank on a defensive back.

However, there is some unease about an ongoing row within the ruling

Conservative party over Brexit that is causing uncertainty about Prime

Minister Theresa May's political future.

Emerging markets units remain beaten down, with the Indian rupee around

record lows of 72.5 to the dollar and the Indonesian rupiah at 20-year lows.

Australia's dollar shed 0.3 percent, while the Russian ruble and South

African rand were both off 0.2 percent.

� Key figures around 0230 GMT �

Tokyo � Nikkei 225: UP 1.0 percent at 22,595.52 (break)

Hong Kong Hang Seng: DOWN 0.2 percent at 26,573.32

Shanghai Composite: DOWN 0.2 percent at 2,663.69

Euro/dollar: DOWN at $1.1586 from $1.1596 at 2100 GMT

Pound/dollar: UP at $1.3030 from $1.3026

Dollar/yen: UP at 111.40 yen from 111.18 yen

Oil West Texas Intermediate: UP six cents at $67.60

Oil Brent Crude: UP 10 cents at $77.47 per barrel

New York Dow: DOWN 0.2 percent at 25,857.07 (close)

London FTSE 100: FLAT at 7,279.30 (close)

Source: Bangladesh Sangbad Sangstha (BSS)