Global markets were mostly lower Thursday as a weak dollar eclipsed strong U.S. economic data and signs that the European Union could offer Britain a special partnership before it leaves the bloc in March.
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KEEPING SCORE: In Europe, Germany's DAX was down 0.8 percent at 12,456.36 and the CAC 40 in France shed 0.3 percent to 5,485.83 on Thursday. The FTSE 100 index of leading British shares fell 0.8 percent to 7,499.88. U.S. markets were set for a tepid opening. Dow futures lost 0.3 percent to 26,072.00 and the broader S&P 500 futures dropped 0.2 percent to 2,909.00.
ASIA'S DAY: Japan's benchmark Nikkei 225 added 0.1 percent to 22,869.50 while the Kospi in South Korea dropped 0.1 percent to 2,307.35. Hong Kong's Hang Seng was 0.9 percent lower at 28,164.05. The Shanghai Composite index lost 1.1 percent to 2,737.74. Australia's S&P/ASX 200 was almost flat at 6,351.80. Shares fell in Taiwan and were mixed in Southeast Asia.
U.S ECONOMY GROWS: The U.S. economy grew at a strong 4.2 percent annual rate in the April-June quarter, the best showing in nearly four years, the Commerce Department said Wednesday. Strength in business investment offset slightly slower consumer spending, placing growth on track to produce the country's strongest full-year gain in more than a decade. Economists expect growth to slow to a still-solid 3 percent annual rate the rest of the year, resulting in full-year growth of 3 percent for 2018.
BREXIT TALKS: On Wednesday, the European Union's chief Brexit negotiator Michel Barnier said negotiations with Britain had reached their "especially difficult" final stretch. He said the EU was prepared to offer the U.K. a special partnership, one it had struck "with no other third country." The pound, which has fallen by more than 15 percent since Britain's 2016 vote to leave the bloc, rose sharply after Barnier's comment. Separately, Britain's Brexit minister Dominic Raab said that the U.K. and the EU may not meet their self-imposed October deadline for a divorce deal, but he remained "stubbornly optimistic" that there would be agreement before Britain leaves the bloc.
POSSIBLE TRADE DEAL: President Donald Trump has said that efforts to reach a deal with Canada in the new North American Free Trade Agreement were "probably on track". The longtime U.S. ally and the country's second-largest trading partner after China had been left out of talks for the past five weeks. Canada has until Friday to reach a deal. Canadian Prime Minister Justin Trudeau said there was a "possibility of getting to a good deal for Canada" by Trump's deadline but said the country will not sign a bad agreement. Mexico, long the target of Trump's ire, has cut a preliminary deal with the United States to replace NAFTA with a pact that's meant, among other things, to shift more manufacturing into the United States. Wall Street has rallied for four days as investors grew more hopeful about trade talks between the U.S., Mexico and Canada.
ANALYST'S TAKE: "The positive impulse seen in the U.S. market has not flown through to Asia. Weakness of the dollar has reversed sentiment in the markets overnight," Michael McCarthy, chief market strategist at CMC Markets in Sydney, said in an interview.
ENERGY: Oil prices have extended their gains on concerns that looming sanctions on Iran may cause supply to drop. Benchmark U.S. crude added 11 cents to $69.62 per barrel in electronic trading on the New York Mercantile Exchange. The contract edged 1.4 percent higher and closed Wednesday at $69.51. Brent crude, used to price international oils, gained 26 cents to $77.72 in London.
CURRENCIES: The dollar tumbled to 111.58 yen from 111.69 yen. The euro eased to $1.1688 from $1.1699.