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GLOBAL MARKETS-Euro slides, pressured by French political uncertainty
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GLOBAL MARKETS-Euro slides, pressured by French political uncertainty
Dec 2, 2024 12:02 AM

*

Euro slides, French bond futures dip on political

uncertainty

*

Chinese stocks boosted by robust manufacturing surveys

*

Trump buoys dollar with tariff threat on BRICS

*

Japan bond yields hit 16-year high on BOJ rate hike bets

(Adds French stock futures, refreshes prices to morning trading

in Europe)

By Amanda Cooper and Kevin Buckland

LONDON/TOKYO, Dec 2 (Reuters) - The euro fell on Monday

as mounting political uncertainty in France kept European

markets under pressure, while tech stocks lifted global shares

and the dollar strengthened in a key week for the outlook for

U.S. interest rates.

The U.S. currency got an additional boost from U.S.

President-elect Donald Trump at the weekend, who warned BRICS

emerging nations against trying to replace the greenback with

any other currency.

"There'll be two drivers of market volatility this month.

The first remains the impact of Trump, especially future fiscal

settings and, increasingly, looming trade wars," said Kyle

Rodda, senior financial markets analyst at Capital.com.

"The second is what the U.S. Federal Reserve does with

policy this month," Rodda said. "If the Fed delivers (a cut) and

provides sufficiently dovish guidance, it may green light some

sort of 'Santa Rally'."

The euro was struggling and French stocks looked set to

slide later due to the risk of an imminent collapse of the

French government, with Prime Minister Michel Barnier confronted

with a Monday deadline to make more budget concessions or face a

no-confidence vote.

France's far-right National Rally (RN) party will likely

back a no-confidence motion against the government unless there

is a "last minute miracle", RN president Jordan Bardella said on

Monday.

The euro fell as much as 0.57% to $1.05155

earlier, having traded at one-week highs on Friday. French stock

index futures fell 1.4%, pointing to a sharp drop at the

start of trade for the CAC 40 index.

If the Barnier government falls, broader downward pressure

on the euro would quickly re-assert itself, including against

the Swiss Franc, said Paul Mackel, global head of FX research at

HSBC.

The Federal Reserve is in sharp focus right now, with

Friday's monthly payrolls report set to inform policymakers'

thinking about whether to cut rates again on Dec. 18.

A number of Fed officials are due to speak this week,

including Fed Chair Jerome Powell on Wednesday. Traders put the

odds of a quarter-point reduction at about 66%.

That has left the dollar index, which measures the

currency against six major rivals, 0.24% higher at 106.28.

In Asia, Chinese shares got an additional boost from a

robust reading in a private manufacturing survey on Monday.

Hong Kong's Hang Seng inched up 0.16%, while mainland

Chinese blue chips rose 0.6%.

In a holiday-shortened session on Friday, the S&P 500

and Nasdaq added 0.6% and 0.8% respectively to close at

all-time highs.

The yen, meanwhile, weakened 0.4% to 150.31, but

remained near Friday's six-week high of 149.47.

In cryptocurrencies, ether hit a near six-month high

of $3,762.20 and was last up 2% at $3,674.44. Bitcoin was

last at $96,434, hovering close to the record high from Nov. 22

at $99,830.

Gold sank 1% to $2,627.71 under pressure from the

strong dollar, after sliding over 3% in November, its worst

monthly performance since September, 2023.

Oil prices rose after Chinese manufacturing data, and as

Israel resumed attacks on Lebanon despite a ceasefire agreement.

Brent crude futures were up 0.8% at $72.41 a barrel,

while U.S. crude was up 0.87% at $68.59.

(Additional reporting by Kevin Buckland in Tokyo and Ankur

Banerjee in Singapore; Editing by Kate Mayberry, Shri Navaratnam

and Ed Osmond)

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