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Asia shares close lower; European stocks wobble

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Investors cautious ahead of Trump's Jan. 20 inauguration

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Resilient dollar leaves yen struggling

(Adds quote in paragraphs 10-11, updates prices throughout)

By Nell Mackenzie and Rae Wee

LONDON/SINGAPORE, Jan 2 (Reuters) - World shares

struggled for traction on Thursday after a jittery close to

2024, while the dollar weakened as investor sentiment dithered

ahead of Donald Trump's return to the White House.

The start of the New Year was shaping up to be a less

favourable one for equities, as uncertainty over the policies of

incoming U.S. President Trump and a more hawkish Federal Reserve

outlook looked set to dominate market rhetoric for now.

Global shares, which had closed out 2024

with a strong annual gain of nearly 16%, clocked a monthly loss

of more than 2% in December and ticked 0.05% lower after the

European open.

European stocks eased during their first trading session of

2025 with the pan-European STOXX 600 index last down

0.25%.

U.S. stock futures pointed higher, however, as S&P 500

futures edged 0.6% up while Nasdaq futures

advanced 0.8%.

Other major bourses hovered either side of the unchanged

mark with notable underperformance seen in France where the CAC

40 shed around 0.9%.

European oil & gas stocks were buoyed by higher

crude futures, as Russian gas firm Gazprom halted gas

exports via pipelines running through Ukraine after Kyiv refused

to renew a transit agreement.

Autos and luxury goods underperformed.

China stocks ended sharply lower, logging their weakest New

Year start since 2016, as factory data disappointed investors

who were also waiting for more policy support.

China's blue-chip CSI 300 Index closed down 2.9%,

while the Shanghai Composite Index tumbled 2.7% and Hong

Kong's benchmark Hang Seng fell 2.2%.

Global markets are kicking off 2025 with a sharp focus on

key economic and inflation indicators, said Bruno Schneller,

managing director at Erlen Capital Management in Zurich.

"The latest PMI release from China, falling short of

expectations, underscores challenges in the manufacturing

sector. However, President Xi's announcement of more proactive

policies to boost growth signals potential shifts in economic

strategy for the region," added Schneller.

China's Xi Jinping said on Tuesday in his New Year's

address that the country would implement more proactive policies

to promote growth in 2025.

Investors are closely monitoring China's recovery with

Trump's talk of tariffs in excess of 60% on imports of Chinese

goods potentially posing a significant headwind.

"With Donald Trump's return to the White House amplifying

external risks and an already fragile domestic economy, a

debt-deflation trap leading to a generational downturn could be

perilously close if upcoming stimulus measures are delayed or

misdirected," said Yingrui Wang, China emerging market economist

at AXA Investment Managers.

LEVYING TARIFFS

Trump will be sworn in as U.S. president on Jan. 20 for his

second term in office. Friday will see the new session of

Congress begin, with a Republican majority in both the House of

Representatives and the Senate.

"A big question will be how the new administration moves on

new tariffs, and which countries they're focused on," Deutsche

Bank analysts said in a note.

The dollar wobbled against other major currencies, down 0.1%

. The euro ticked 0.08% higher to $1.03615 but

strayed not too far from a more than one-month trough.

Markets now price in about 42 basis points worth of rate

cuts from the Federal Reserve this year, compared

with more than 100 bps from the European Central Bank

and 60 bps from the Bank of England.

In London trade, U.S. 10-year Treasury yields were down

around 3 bps at 4.22%.

Oil prices rose with Brent crude futures up 32 cents

to $74.96 a barrel. U.S. West Texas Intermediate crude

gained 31 cents to $72.02.

Spot gold traded 0.5% higher at $2,636 an ounce. The

yellow metal had a banner year in 2024, surging more than 27% in

its largest annual gain since 2010.

Russian gas exports via Soviet-era pipelines running through

Ukraine came to a halt on New Year's Day, marking the end of

decades of Moscow's dominance over Europe's energy markets.

The gas had kept flowing despite nearly three years of war,

but Russia's Gazprom said it had stopped at 0500 GMT on January

1, after Ukraine refused to renew a transit agreement.

The benchmark front-month contract at the Dutch TTF hub

hit a 14-month high at 50.85 euros per megawatt

hour (MWh) by 0913 GMT, according to LSEG data.