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A securities brokerage in Shanghai. Photographer: Qilai Shen/Bloomberg

(bloomberg)

(Bloomberg) -- The euro erased losses on the chance of an earlier rate increase by the European Central Bank after a report that some policy makers were uneasy about expectations for a hike as late as December 2019.

European stocks ended fractionally higher while futures for the S&P 500 advanced in a lackluster trading session overshadowed by the U.S. holiday. The mood in Asia was more downbeat, and shares slipped even as the yuan extended a rebound. The Brazilian real weakened for a second day as the Ibovespa rose, led by Petroleo Brasileiro SA.

Telecom companies were the biggest winners on the Stoxx Europe 600 Index, though declines in technology shares helped offset the move. Trading volumes were more than 40 percent below the 30-day average. Asian shares notched further losses even as China’s currency rose for a second day, though it pared some gains after a Reuters report that the central bank is comfortable with a weaker yuan. The yen nudged higher and the euro slipped, while the pound rose on data showing the U.K.’s services sector grew at the fastest pace in eight months in June. West Texas Intermediate oil gave up earlier gains and most industrial metals declined.

While the People’s Bank of China yesterday gave assurances that the yuan won’t be weaponized, governmental trade restrictions and market intervention remain key themes. The latest tit-for-tat moves include a Chinese court temporarily banning chip sales by an American tech firm, while tariffs on goods flowing the other way come into effect on Friday. With U.S. markets shuttered for Independence Day, the focus is shifting to a busy end to the week, when minutes from the last Federal Reserve meeting and jobs numbers are due.

The move in the yuan set a gauge of developing market currencies on course for the first back-to-back gains in a month, while the MSCI Emerging Market Index of stocks headed for a third consecutive decline.

Terminal users can read more in Bloomberg’s Markets Live blog.

These are key events coming up this week:

  • Federal Reserve releases minutes of its June 12-13 meeting, when FOMC policy makers raised the benchmark rate a quarter point for the second time this year and lifted the median forecast to four total increases in 2018.
  • U.S. payrolls are due Friday.
  • Also on Friday, the U.S. is scheduled to impose tariffs on $34 billion of Chinese goods. Beijing has said it will slap tariffs on an equal value on U.S. exports including agricultural and auto exports.

Here are the main market moves:

Stocks

  • The Stoxx Europe 600 Index gained 0.1 percent to the highest in more than a week.
  • Futures on the S&P 500 Index rose 0.3 percent as of 12:59 p.m. New York time.
  • The MSCI All-Country World Index rose was little changed.
  • The MSCI Emerging Market Index rose 0.1%.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.1 percent to the lowest since Friday.
  • The euro was slightly higher at $1.1662 after having fallen as much as 0.2 percent.
  • The British pound climbed 0.3 percent to $1.3237, the strongest in more than a week.
  • The Japanese yen fell 0.1 percent to 110.48 per dollar.

Bonds

  • Britain’s 10-year yield gained three basis points to 1.269 percent, the biggest climb in more than a week.
  • Germany’s 10-year yield gained one basis point to 0.31 percent, the largest advance in more than a week.
  • France’s 10-year yield increased one basis point to 0.645 percent, the first advance in more than a week.

Commodities

  • Gold gained 0.4 percent to the highest in more than a week.
  • West Texas Intermediate crude was up 0.3% at $74.33 a barrel.
  • LME copper fell 1.3 percent to $6,406.50 per metric ton, the lowest in almost 11 months.

--With assistance from Tian Chen, Sharon Cho, Gregor Stuart Hunter, Adam Haigh and Mark Burton.

To contact the reporter on this story: Eddie van der Walt in London at evanderwalt@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Samuel Potter, Christiana Sciaudone

©2018 Bloomberg L.P.

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