October 16, 2019 / 6:13 PM / 5 months ago

GLOBAL MARKETS-Stocks flat on data, earnings; pound volatile

    * Brexit negotiations resume in Brussels
    * Pound volatile around Brexit talks
    * Wall Street little changed

 (Updates With close of European markets)
    By Chuck Mikolajczak
    NEW YORK, Oct 16 (Reuters) - A gauge of world stock markets
was flat on Wednesday as U.S. data that raised concerns about a
slowing economy was offset by a solid start to earnings season,
while sterling was volatile as negotiations on a Brexit deal
    On Wall Street, stocks retreated after monthly retail sales
data for September showed a decline for the first time in seven
months, stoking concerns softness in the manufacturing sector
was starting to spread to the broader economy.
    "Retail sales were definitely on the weaker side and given
that the consumer is one of the key pillars holding up the U.S.
economy, any weakness in consumer indicators is obviously a sign
of concern," said Ellen Hazen, portfolio manager F.L. Putnam in
Wellesley, Massachusetts. 
    Data later in the session showed business inventories were
unexpectedly flat in August, which suggested inventory
investment could also drag on third-quarter economic growth. 
    Concerns about the trade dispute between the U.S. and China
also weighed. The U.S. House of Representatives on Tuesday
passed legislation related to pro-democracy protests in Hong
Kong, prompting China to warn in response that bilateral
relations would be damaged if the measures became law.

    Losses were offset by a solid start to earnings season. Bank
of America shares rose 1.98% following its quarterly
    Earnings for S&P 500 companies are expected to show a
decline of 3% for the quarter, according to Refinitiv data, down
from 5.1% growth expected at the start of the year. 
    "They legitimately are coming in better than expected so
far, not by leaps and bounds, but incrementally, yes they are.
This is not just expectations having been set really low, at
least from the earnings estimate standpoint," said Hazen. 
    The Dow Jones Industrial Average fell 9.03 points, or
0.03%, to 27,015.77, the S&P 500 lost 6.52 points, or
0.22%, to 2,989.16 and the Nasdaq Composite dropped
30.31 points, or 0.37%, to 8,118.40.
    Sterling was volatile as negotiators worked to clinch
a last-minute deal for Britain's exit from the European Union
before an EU summit on Thursday. 
    French President Emmanuel Macron said on Wednesday a deal
with Britain on its departure from the European Union was being
finalized and could potentially be agreed on at Thursday's
    The pound had strengthened by more than 5% over the past
five sessions as investors rushed to reprice the prospect of a
last-minute Brexit deal before the Oct. 31 deadline.    
    Sterling was last at $1.2824, up 0.30% on the day.

    The dollar index, tracking the currency against six
major peers, fell 0.26%, with the euro up 0.33% to
    European stocks closed slightly lower as they contended with
the conflicting reports on Brexit talks and the dawn of earnings
season, holding within a tight range during the session.

    Companies listed on the STOXX 600 index are now
expected to report a decline in third-quarter earnings of as
much as 3.7%, worse than the 3% expected a week ago, according
to Refinitiv data through Tuesday.
    In commodities, oil lost ground on concerns demand could be
hurt by a slower economy, along with forecasts of a further
climb in U.S. inventories.
    U.S. crude rose 1.17% to $53.43 per barrel and Brent
 was last at $59.43, up 1.17% on the day.
    In emerging markets, Turkey's Halkbank saw its
shares drop 4.1% after U.S. prosecutors charged the state-owned
lender with taking part in a multibillion-dollar scheme to evade
U.S. sanctions on Iran, which the company said were part of
sanctions leveled against Ankara over its military operation in
    Overall emerging market stocks rose 0.44%. 

 (Additional reporting by Karen Brettell; Editing by Bernadette
Baum and Kirsten Donovan)
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