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European shares stall after gains for Asia and Wall Street

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Sterling shuffles higher as BoE holds rates in tight call

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Traders pare back bets of Fed cut in December

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Gold claws back above $4,000 an ounce

(Updates after BoE holds rates and ahead of US market open)

By Marc Jones

LONDON, Nov 6 (Reuters) - European shares slipped on

Thursday, having uncoupled from Asia and Wall Street this week,

while the pound eased away from a 7-month low as the Bank of

England opted against a pre-UK budget interest rate cut.

Asia's main markets had made solid gains overnight,

some after sharp tech-led selloffs earlier this week,

but in Europe and in pre-market U.S. trading those same worries

were already resurfacing.

The pan-European STOXX 600 lost a modest 0.2%

but French data-centre equipment firm

Legrand

saw its shares plunge almost 12% as it revealed

just how painful US trade tariffs are proving.

Wall Street also looked set for another subdued start

with chip giant Qualcomm's ( QCOM ) shares pointing down more

than 2% after a

warning

that its chips might not be quite as dominant in Samsung

gadgets in future as it has been used to.

Over in the currency markets, the dollar was

edging back from the more-than-6-month high it had hit after

upbeat U.S. data on Wednesday and as traders digested the day's

main business - the BoE's rate decision and one in Norway.

Ahead of what are likely to be UK tax rises in UK Chancellor

Rachel Reeves' budget later this month, but also mindful of

Britain's still high headline inflation rate, the nine-strong

BoE Monetary Policy Committee voted 5-4 to keep the central

bank's benchmark Bank Rate at 4.0%

That razor-thin margin kept expectations of a cut before

year-end very much intact. It also kept sterling 0.3%

higher on the day at $1.3090 having drooped to a 7-month low of

$1.3011 on Wednesday. 0#GBPIRPR

"I think out of all the G7 central banks, the Bank of

England is in the trickiest position," Allspring multi-asset

portfolio manager Rushabh Amin, who had expected the BoE to hold

off from a cut ahead of the November 26 budget, said.

"We are a bit underweight (on sterling) into the budget," he

added, although that could be readjusted in the coming weeks. "I

think the base case is just higher volatility."

BOND MARKET MOVES

In the bond markets, gilt yields - the proxy for

UK government borrowing costs - dipped fractionally to 4.47%,

while those on German bunds were also down from a 4-week high at

2.67%.

U.S. Treasury yields mostly held their overnight ground as

traders continued to trim bets on a Federal Reserve rate cut

next month, which has pushed the dollar to a five-month peak in

recent days.

Data on Wednesday showed the U.S. services sector activity

increased to an eight-month high in October as new orders grew

solidly, while private payrolls rose 42,000 last month,

exceeding expectations.

"We actually are not too worried about the job market," said

Keiko Kondo, head of multi-asset investments for Asia at

Schroders.

"Market is tight, companies are probably investing more in

technology, probably not necessarily hiring more people, but not

firing people either. So probably the way that even the economy

and the labour market operate is changing a bit."

EYE ON THE FUTURES

Wall Street futures pointed to a largely steady start there

later, where investors remain focused on stretched valuations,

the U.S. government shutdown, trade tariff legal rulings, and

the ongoing slew of corporate earnings.

On the tariff front, U.S. Supreme Court justices raised

doubts on Wednesday over the legality of President Donald

Trump's sweeping tariffs, in a case with implications for the

global economy that marks a major test of Trump's powers.

Thursday's Qualcomm ( QCOM ) share price drop, meanwhile, comes just

days after both the S&P 500 and Nasdaq logged their steepest

intraday drops in close to a month on Tuesday after traders were

spooked by various warnings about a likely market pullback.

Overnight, Asia had seen Japan's Nikkei rebound 1.4%

after sliding 2.5% on Wednesday, which in turn had been a

follow-on from Wall Street's drop late on Tuesday.

Hong Kong's Hang Seng rose 2.1%. South Korea's Kospi

also jumped more than 2% after it opened but then lost

traction to end a more modest 0.8% higher having tumbled 2.85%

in the previous session.

In China, Shanghai's benchmark stock index reclaimed the

psychologically important 4,000 level, as optimism over tech

self-sufficiency boosted its semiconductor and artificial

intelligence-related shares.

"We do see the potential broadening out of this rally," said

Daniel Blake, Morgan Stanley's Asia and emerging markets equity

strategist, referring to a rally in Chinese markets which has

been led by technology companies.

Allspring's Amin, however, said it was one of the markets

the firm was thinking about taking profit on following this

year's rally.

The 10-year U.S. Treasury yield was last at

4.1473%, having risen nearly seven basis points in the previous

session, while the two-year yield stood at 3.6213%.

Wednesday's upbeat U.S. economic data releases have led to

traders now pricing in a roughly 61% chance of a Fed cut in

December, down from about 70% earlier in the week.

Against the yen, the dollar was down 0.3% in European

trading to 153.70. The euro was up 0.2% at $1.1515 while

Norway's crown rose against both the dollar and euro

after its central bank also held its interest rates steady.

In commodities, oil prices edged higher, with Brent crude

futures up 0.6% at $63.95 a barrel while gold

rose 0.7%, back above $4,000 an ounce.

"The odds of a December Fed funds rate cut are drifting

further south," said Jose Torres, senior economist at

Interactive Brokers.

(Additional reporting by Rae Wee in Singapore

Editing by Philippa Fletcher, Peter Graff)